1. (a) Eligibility. The board may provide financial assistance in the form of low interest loans through CWSRF program account to a political subdivision:

   1. (1) that is a disadvantaged community; or

   2. (2) that will serve an area that:

      1. (A) is located outside the current service area of the political subdivision; and
      2. (B) meets the definition of a disadvantaged community;

2. (b) Definition of disadvantaged community.

   1. (1) A community is a disadvantaged community if it meets the definition of a disadvantaged community presently or if as a result of a proposed project, the community becomes a disadvantaged community.

   2. (2) Disadvantaged community means an area in which the project will provide service that has an adjusted median household income which is no more than 75% of the median state household income for the most recent year for which statistics are available; and

      1. (A) if the service area is not charged for sewer services, has a household cost factor for water rates that is greater than or equal to 1.0%; or
      2. (B) if the service area is charged for water and sewer services, has a combined household cost factor for water and sewer rates that is greater than or equal to 2.0%.
   3. (3) The household cost factor is calculated as the average yearly water bill divided by adjusted median household income.
   4. (4) The combined household cost factor is calculated as the average yearly water bill plus the average yearly sewer bill divided by the adjusted median household income.
   5. (5) The average yearly water bill is calculated as the average number of persons per occupied household multiplied by 2,325 gallons per person per month multiplied by the proposed monthly water rate multiplied by 12. The proposed monthly water rate shall include the cost of the proposed project. Any funds for the proposed project received from sources other than the CWSRF shall be deducted from the cost of the project.
   6. (6) The average yearly sewer bill is calculated as the average number of persons per occupied household multiplied by 1,279 gallons per person per month multiplied by the monthly sewer rate multiplied by 12.
   7. (7) The adjusted median household income is calculated as the annual median household income identified in the most recent U.S. Census from the closest applicable census tract multiplied by the current Texas Consumer Price Index divided by the most recent decennial Texas Consumer Price Index. The adjusted median income may also be calculated using data from a survey approved by the executive administrator of a statistically acceptable sampling of customers in the service area completed within the last 12 months. The necessary information will make available through the executive administrator to the applicant.
   8. (8) If taxes, surcharges or other fees are used to subsidize the water and/or sewer system, the average annual amount per household may be included in calculating the household cost factor or the combined household cost factor.

3. (c) Interest rates and subsidies. Notwithstanding the provisions of §375.52 of this title (relating to Lending Rates), the interest rates for a project eligible for the funds available to disadvantaged communities program will be determined by the provisions of this subsection.

   1. (1) If the adjusted median household income for the service area is between 75% and 70% of the median state household income, the board's financial assistance shall be in the form of a loan with a 1.0% interest rate.
   2. (2) If the adjusted median household income for the service area is less than or equal to 70%, the board's financial assistance shall be in the form of a loan with a 0.0% interest rate.
4. (d) Additional project costs. If the actual cost of a project funded under this section exceeds the estimated cost of the project as listed on the intended use plan, the additional cost will be funded through the Financial Assistance Account of the Texas Water Development Fund and interest rates for the additional cost will be set according to the provisions of §363.33 of this title (relating to Interest Rates for Loans and Purchase of Board's interest in State Participation Projects).

Source Note:The provisions of this §375.19 adopted to be effective January 6, 2004, 29 TexReg 216; amended to be effective August 10, 2004, 29 TexReg 7736.