The city of Kyle received a boost from a state water agency July 23 when it was announced among a first wave of recipients of financial assistance for water projects.

The Texas Water Development Board approved a $12.5 million loan to the Hays Caldwell Public Utility Agency, a coalition of entities along the I-35 corridor, that will receive its future water supply from the Carrizo-Wilcox Aquifer in Caldwell County.

The loan is one of 21 financial assistance programs awarded to state entities as part of the inaugural round of loans from the State Water Implementation Fund for Texas, or SWIFT.

“We’re excited by it,” HCPUA Executive Director Graham Moore said. “The SWIFT funds provide for a lower interest rate than we could otherwise get on the open market. That means the project will be a little cheaper for our ratepayers, which is always a good thing.”

Among the entities in the HCPUA partnership are the cities of Buda, Kyle and San Marcos.

Moore said the agency is reducing its request to $7.8 million because the city of San Marcos opted to pay its portion with cash rather than issuing debt.

The funds will be used in the planning, design, acquisition and construction of a pipeline connecting Kyle to Buda.

Kyle’s portion of the SWIFT loan is about $3.7 million, and Canyon Regional Water Authority, another HCPUA partner, will receive about $4.1 million, Moore said.

The city of Buda did not participate in the loan program. It has issued the maximum amount of debt this year to receive favorable interest rates, City Manager Kenneth Williams said. The city began the first issuance of a $55 million bond this year.

“Therefore participating in the SWIFT debt issuance would have put us outside financial policy and possibly created higher rates in our next issuance for bond projects,” Williams said. “The city of Buda plans to issue debt to finance its portion of the HCPUA Phase 1 project after Jan. 1, 2016.”

Williams said the city could also choose to pay cash for its portion of the project, which is about $700,000, Moore said.