Q
What does Texas SB971 do?
SB 971 resolves a statutory conflict by repealing the broader definition of "rural political subdivision" (Section 15. 001(14), added by S. B.
SB971
Regular Session
Relating to the definition of a rural political subdivision for purposes of the Texas Water Assistance Program.
LowStandard timeline
Low Cost
Effective:2025-09-01
Enforcing Agencies
Texas Water Development Board
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Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
- Effective Date: September 1, 2025.
- Compliance Deadline: Immediate. Entities currently preparing applications for the upcoming fiscal cycle must utilize the surviving definition (H.B. 3582) to ensure eligibility does not lapse mid-process.
- Agency Rulemaking: The TWDB is expected to update program guidance documents and Intended Use Plans (IUPs) in Q3 2025 to reflect the statutory cleanup. Watch for "Program Information Memorandum" updates regarding eligibility calculations.
Immediate Action Plan
- 1. Audit Eligibility: Immediately compare your service area demographics against the H.B. 3582 definition of "rural political subdivision."
- 2. Review Pending Applications: Identify any active loan or grant applications that relied on the now-repealed Section 15.001(14) and assess the viability of these applications post-September 1.
- 3. Update Financial Models: If eligibility is at risk, run pro forma financial models using market-rate interest assumptions to determine project feasibility without state subsidies.
- 4. Contact TWDB: For multi-phase projects, request written confirmation from your TWDB project manager regarding how the change in definition applies to future funding tranches.
Operational Changes Required
Contracts
- Financing Contingencies: Review all development and infrastructure contracts that rely on state-subsidized financing. If a project loses "rural" status, it may no longer qualify for low-interest loans or principal forgiveness.
- Vendor Agreements: Amend scopes of work for grant writers and engineering firms to mandate eligibility verification under the surviving statute before billable hours are incurred on application drafting.
Hiring/Training
- Grant Teams: Staff responsible for TWDB applications must be retrained to stop using the S.B. 469 definition. They must now strictly apply the population caps and Metropolitan Statistical Area (MSA) exclusions found in the remaining statute.
Reporting & Record-Keeping
- Demographic Substantiation: Applicants must curate specific data sets (Decennial Census or most recent American Community Survey) that prove the entity meets the surviving definition.
- Legal Opinions: In-house counsel should generate an internal memo confirming the entity’s status under the single controlling definition to support future bond counsel opinions.
Fees & Costs
- Cost of Capital: While there are no new regulatory fees, entities that lose "rural" status will be forced into market-rate financing. This could result in a significant increase in debt service costs for planned infrastructure projects.
Strategic Ambiguities & Considerations
- Pipeline Applications: The law does not explicitly grandfather applications pending as of September 1, 2025. There is a regulatory risk that the TWDB may reject applications that were valid when submitted but invalid upon the effective date of the repeal.
- Data Source Discretion: The surviving definition relies on population thresholds. It remains within TWDB discretion to determine which specific data source (e.g., 2020 Census vs. 2024 Estimates) is dispositive for entities hovering near the population cap.
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Legislative Timeline
This bill's path through the Texas Legislature
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Official Analysis
BILL ANALYSIS
| Senate Research Center | S.B. 971 |
| 89R3553 ANG-F | By: Sparks |
| Water, Agriculture and Rural Affairs | |
| 2/20/2025 | |
| As Filed |
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
The Texas Water Development Board (TWDB) offers affordable financial assistance to help Texans fund water-related infrastructure projects. These initiatives have spanned the state, from El Paso to Beaumont and Dalhart to Brownsville, providing financing for communities of all sizes to meet their water needs and regulatory standards with long-term solutions. As of November 30, 2024, TWDB has made 6,114 financial commitments for a total of approximately $39.5 billion since the agency's inception in 1957.
During the Sunset Advisory Commission's 2022 review of TWDB, concerned parties emphasized the need for a consistent definition of "rural political subdivision" in state law to enhance the agency's effectiveness. The 88th Legislature, Regular Session, addressed this need by passing H.B. 3582, which established a definition of "rural water" developed in collaboration with TWDB and stakeholders. This definition accurately reflected the needs of rural and urban communities. Later in the session, S.B. 469 was enacted with similar language but included a scrivener's error that unintentionally expanded the definition to include urban political subdivisions. Under the Code Construction Act, S.B. 469 now controls as the most recently passed legislation, leaving the flawed definition in place.
This bill removes Section 15.001(14) of the Water Code, which was added by Chapter 1064 (S.B. 469) during the 88th Legislature. The correct definition from H.B. 3582 will remain in statute as the controlling language.
As proposed, S.B. 971 amends current law relating to the definition of a rural political subdivision for purposes of the Texas Water Assistance Program.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Repealer: Section 15.001(14) (relating to defining "rural political subdivision"), Water Code.
SECTION 2. Effective date: upon passage or September 1, 2025.
Senate Authors
Coauthors (2)
House Sponsor
Bill Text(with markup)
| S.B. No. 971 | ||
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| relating to the definition of a rural political subdivision for | ||
| purposes of the Texas Water Assistance Program. | ||
| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
| SECTION 1. Section 15.001(14), Water Code, as added by | ||
| Chapter 1064 (S.B. 469), Acts of the 88th Legislature, Regular | ||
| Session, 2023, is repealed. | ||
| SECTION 2. This Act takes effect immediately if it receives | ||
| a vote of two-thirds of all the members elected to each house, as | ||
| provided by Section 39, Article III, Texas Constitution. If this | ||
| Act does not receive the vote necessary for immediate effect, this | ||
| Act takes effect September 1, 2025. | ||
| TO: | Honorable Charles Perry, Chair, Senate Committee on Water, Agriculture and Rural Affairs |
| FROM: | Jerry McGinty, Director, Legislative Budget Board |
| IN RE: | SB971 by Sparks (Relating to the definition of a rural political subdivision for purposes of the Texas Water Assistance Program.), As Introduced |
No significant fiscal implication to the State is anticipated.
It is assumed that any costs associated with the bill could be absorbed using existing resources.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
| Source Agencies: | 580 Water Development Board |
| LBB Staff: | JMc, FV, BC, CWi |
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Quick Reference
Frequently Asked Questions
Common questions about SB971
Q
Who authored SB971?
SB971 was authored by Texas Senator Kevin Sparks during the Regular Session.
Q
When was SB971 signed into law?
SB971 was signed into law by Governor Greg Abbott on June 20, 2025.
Q
Which agencies enforce SB971?
SB971 is enforced by Texas Water Development Board.
Q
How urgent is compliance with SB971?
The compliance urgency for SB971 is rated as "low". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of SB971?
The cost impact of SB971 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does SB971 address?
SB971 addresses topics including economic & industrial development, economic & industrial development--general, political subdivisions, water and water--development.
Legislative data provided by LegiScanLast updated: November 25, 2025
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