How JACOB | MARTIN and TWDB can Assist Public Water Systems
At JACOB | MARTIN, our Municipal Team is honored to partner with public water systems (PWSs) of all sizes across Texas, providing regulatory support, system assessments, feasibility studies, and supply/demand analyses. In addition to evolving federal water quality regulations, rapid population growth across the state is driving many PWSs to plan for system improvements and expansions.
What are Public Water Systems facing today?
Texas is experiencing a significant population boom, driven in large part by expanding economic opportunities such as solar energy and artificial intelligence developments. The growing workforce supporting these industries is placing increased demands on housing and infrastructure across the state. To meet these challenges, PWSs turn to JACOB | MARTIN for trusted guidance and support.
What are PWSs seeing from the AI industry and implementation of data centers to support the AI industry?
Artificial intelligence (AI) is no doubt the fastest growing industry in the US and the world. In many ways it is a race to see who can get there first and gain an advantage over their competitors both from a private investment standpoint and a federal security standpoint. The engine behind AI is the data centers that are processing the information. Data centers are popping up all over the nation, and the trend looks like it will continue for the foreseeable future. The question becomes; how will all these data centers affect the long-term supply of water. Water is an important component to the data centers because there is a tremendous amount of cooling that is required for the processing units that are housed in the data centers. The long-term effects are still unknown; however, strides have been made in technology and methods for cooling to help mitigate the use of water. Many of the data centers that are now being constructed are designed with a “closed loop” cooling system. The closed loop cooling system allows for an initial water demand to fill the system and then a relatively small replenishing water demand to keep the cooling system full over time.
Though the overall water demand is being mitigated with the newer cooling methods, there are still water supply concerns that need to be thought through before a PWS commits to a long-term supply of water to data centers. Due to the large amount of land needed to construct the data centers coupled with the need for a power source, many of the data centers are being constructed in remote rural areas not close to urban populated areas where sources of water supply are more plentiful. It is also important to understand exactly what the water demands are for the data centers because typically there is a construction water demand and domestic water demand. The construction water demand is typically much larger and can be as much as ten times more than the final domestic water demand after the data center is in operation. Because of the remote locations of the data centers and the very large up-front water demand for construction compared to the final domestic demand for water, it is important that a PWS not overbuild the infrastructure that will be supplying water to the data center for the long-term. Yes, it is a good opportunity for privately funded improvements to a PWS, but at the same time large, oversized water infrastructure can result in long-term water quality issues in the system.
The question then becomes, who is going to pay for all these water system infrastructure improvements. This burden of cost should not be on your customers. Engage the developers of data centers early about equitable cost sharing of the water supply infrastructure needed to provide water for the data centers. The improvements to a PWS resulting from the data centers can be a great thing but only if the end user is sharing their burden of the cost.
How is JM Assisting PWSs with Supporting these Demands?
If a data center is coming to a neighborhood near you, the PWS needs to start planning for it as early as possible. This is where JACOB | MARTIN can assist you. We are currently assisting several PWSs in preparation for a data center within their service area. Some of those assistance efforts are in a very preliminary planning phase, consisting of assessment of available water sources and capacity of infrastructure. Other assistance efforts are in a more detailed feasibility phase where facilities are being sized and located, and opinions of probable costs are being generated to determine what it will take to serve a data center. If there is even a hint of a data center popping up in your PWS, give us a call to assist with the early stages of planning.
How can TWDB help the PWS?
In addition to the State Revolving Fund (SRF) programs offered through the Texas Water Development Board (TWDB) each year, the TWDB has recently released information regarding a new funding opportunity for eligible PWSs across the state. The Water Supply and Infrastructure Grant (WSIG) emerged from House Bill 500, passed during the 89th Legislative Session, which appropriated $1.038 billion in funds to the TWDB for water supply and infrastructure projects. This is a one-time opportunity for eligible entities to pursue.
i. Who is Eligible to Apply?
Political subdivisions such as cities and counties are eligible to apply. Water Supply Corporations (WSCs) or investor-owned utilities are ineligible for WSIG funding as defined in Tex. Const., Art. III, §§ 51 and 44. For an Entity’s funding application to be considered complete and eligible, a FY2025 financial audit must be included.
ii. Eligible Projects
Eligible projects include those that address water supply needs and/or correct water system deficiencies related to water quality, system capacity, pressure, and water loss. Projects may involve upgrades to existing water systems, replacement of facilities, or the provision of new or expanded water service.
Example projects include but are not limited to: water meter replacement; service line replacement (utility-owned portion only); construction of new water wells and associated piping; new water storage tanks or towers; water line replacements and extensions; water treatment plant improvements; and reuse projects consistent with the 2027 State Water Plan.
iii. Project Phases Eligible for WSIG funding
WSIG funding is available for planning, acquisition, design, and construction for small entities (population of 150,000 or less). For small entities, reimbursement of previously incurred costs for the project will only be considered if the costs were incurred on or after June 22, 2025.
WSIG funding is available for large entities (population 150,001 or greater) for construction only. For large entities, the project must be ready to proceed to construction (“bid ready”), meaning planning, acquisition, and design have already been completed. Large entities will not be eligible for reimbursement of previously incurred costs for the project.
iv. Proposed Allocation of WSIG Funding
| Service Area Population Size | < 10,000 | 10,001-150,000 | 150,001-1 million | > 1 million | Total |
| Funding Cap per Project (TBD) | $5 million | $15 million | $25 million | $40 million | |
| Total Funding Target | $71 million | $142 million | $181 million | $400 million | $794 million |
| Canal Lining/Conversion Projects | $100 million for match funding for North American Development Bank projects | $894 million | |||
* $131 million remains unallocated pending receipt of applications at which time TWDB could review submitted needs and allocate at that time. $13 million is reserved for administrative costs as authorized in Senate Bill 1.
v. Need to Know Milestones for WSIG Funding
| Comment Period Closes | February 4, 2026 |
| Solicitation of Application Opens (open for 120 days) | March 2026 |
| Application Due | July 2026 |
| TWDB Issues Commitments | Fall 2026 |
| All commitments, grant agreements, and closings to escrow should be completed | May 1, 2027 |
| Project Closed Out and all Escrow Funds Expended | August 31, 2031 |
i. Can an Entity Pursue both the SRF programs and the WSIG program?
As WSIG funding is limited and competitive, the TWDB encourages the Entity to still submit a Project Information Form (PIF) for the upcoming 2027 State Revolving Fund IUP. Provided the entity has not already received a TWDB funding commitment for the same project, it may still consider submitting a WSIG application. Only one (1) WSIG funding application can be submitted per Entity.
ii. Find out more about the WSIG
Public Water Systems (PWSs) in Texas play a vital role in supplying water to thousands of Texans for residential, commercial, and industrial use. The team at JACOB | MARTIN has partnered with public water systems of all sizes and types, providing tailored solutions to ensure water supply and demand are both achievable and sustainable.
If you operate or need assistance with a public water system, we encourage you to contact your local JACOB | MARTIN representative.