(a) The fund may be used to provide low-interest loans to rural political subdivisions for:
  (1) water or water-related projects and for water quality enhancement projects, including but not limited to:
    (A) the construction of infrastructure facilities for wholesale or retail water or sewer service;
    (B) desalination projects;
    (C) the purchase or lease of water well fields;
    (D) property necessary for water well fields;
    (E) the purchase or lease of rights to produce groundwater;
    (F) onsite or wetland wastewater treatment facilities; and
    (G) the interim financing of construction projects;
  (2) water projects included in the state water plan or a regional water plan;
  (3) development of groundwater sources and acquisition of water rights, including groundwater and surface water rights;
  (4) the acquisition of retail public utilities as defined by §13.002 of the Texas Water Code;
  (5) the acquisition of water supply or sewer services facilities or systems owned by municipalities or other political subdivisions;
  (6) construction, acquisition, or improvement of water and wastewater projects to provide services to an economically distressed area;
  (7) planning and design costs, permitting costs, and other costs associated with state or federal regulatory activities with respect to a project; and
  (8) obtaining water or wastewater service supplied by other political subdivisions or financing the consolidation or regionalizing of neighboring political subdivisions, or both.
(b) The fund may be used to provide zero interest loans, negative interest loans, loan forgiveness, or grants for any purpose described in subsection (a) of this section under criteria developed by the board.
(c) The board may use money in the fund to contract for outreach, financial, planning, and technical assistance to assist rural political subdivisions in obtaining and using financing from any source for a purpose described by §15.994 of the Texas Water Code.
(d) The fund may be used to buy down interest rates on loans.
(e) The fund may be used to finance a joint application submitted by a rural political subdivision and a federal agency, a state agency, or another rural political subdivision where the parties have entered into an agreement to submit a joint application for financial assistance.
(f) The fund may be used as a source of revenue for the repayment of principal and interest on water financial assistance bonds issued by the board if the proceeds of the sale of these bonds will be deposited into the fund.

Source Note: The provisions of this §365.3 adopted to be effective January 1, 2002, 26 TexReg 11031; amended to be effective May 11, 2004, 29 TexReg 4551; amended to be effective November 30, 2011, 36 TexReg 8036; amended to be effective December 28, 2017, 42 TexReg 7410; transferred effective February 15, 2020, as published in the January 24, 2020 issue of the Texas Register, 45 TexReg 593