Water Board: review of Devine’s
$9.9 million loan and some “potentially ineligible” costs

Shortly before press time, Chief Communications Officer for the Texas Water Development Board, Lauren Munguia, gave the following update on The City of Devine’s $9.9 million dollar loan that is currently under review:

“The City of Devine received funding in 2018 from the Texas Water Development Board (TWDB) for a project to replace existing asbestos cement waterlines in the City’s water system. Waterline projects typically include removing the existing lines, but with asbestos, because it’s hazardous material, the TWDB cannot fund that portion of the project. The TWDB is able to fund the purchase and installation of the new waterlines, but not the removal of existing asbestos cement waterlines. Some communities have taken their existing asbestos cement waterlines out of service with the “abandonment in place” technique, which involves not disturbing the waterline and covering them with concrete to mitigate any potential contamination concerns. A community can also choose to remove the existing asbestos cement waterlines but is required to use local funds or another funding source to do so.
“These constraints on the funding were discussed with the City and its consultants prior to the City receiving a funding commitment from the Board and through each phase of the project’s planning and design. The City acknowledged the constraint via email at the time of commitment. Condition 11 in the TWDB’s resolution committing funds to the project details this and requires that the City’s bond documents include such language. The TWDB’s approval letters for the plans and specifications for both construction contracts include this language as well, noting that the TWDB cannot fund testing, remediation, removal, disposal, or related work for contaminated or potentially contaminated material. The City included these contract conditions in its executed construction contracts.
 “A Categorical Exclusion (CE) is simply a determination of the level of review required for the environmental assessment of the project. It doesn’t mean that the asbestos line is somehow excluded from our normal funding requirements and can be paid for with TWDB funds. This project’s Categorical Exclusion just says that the impacts of the project aren’t expected to be significant enough to require a “full review,” so, it is “excluded” from the need for a full review. A full review is just a more in-depth environmental review that requires coordination with more government agencies than a CE, but the environmental reviews are similar. The connection with our funding is only that, for this project, we need a CE prior to providing funds for construction. We make sure the City has this very early in the project.
“In April 2021, the City informed the TWDB via email that it had terminated the first contract. In a November 2022 meeting requested by the City and its consultants, the City informed the TWDB that it had started construction again with a new contractor to complete the first phase of the project. The City recognized that, with the new contract, the project funding was insufficient to complete all planned phases of the project. It was at that time the City indicated some of the construction work completed under the first contract was inadequate, providing the example that some lines were not buried to a sufficient depth. Note: In our previous email to The News, we incorrectly said October 2022 instead of November 2022. It was in November 2022 that we were alerted of the new contract.
 “As a result of this meeting, the TWDB determined that more information was needed regarding the extent of potentially ineligible funding costs in both contracts given that costs to fund rework of previously funded work are ineligible. 
“ The City has not yet provided sufficient information to document the eligibility of the project costs of both construction contracts or to demonstrate its bidding and award of the second construction contract. These approvals are needed for the TWDB to authorize start of construction and release construction funds.
“The team manager, Dain Larsen, has served as a consistent member of this project team since the City first began meeting with the TWDB prior to the submittal of a financial application. Likewise, the assigned environmental reviewer who prepared the Categorical Exclusion referenced in your email has not changed. While the TWDB’s engineering reviewer has changed since 2018, Mr. Larsen has worked with each reviewer to help ensure consistency and that the change in staffing did not contribute to delays or other issues with the City’s project.
 “We are committed to continuing to work with the City on this important project and look forward to receiving the information necessary to issue the required approvals.”