(a) The board by rule shall undertake to finance projects through the fund that will lead to seven million acre-feet of new water supplies by December 31, 2033.
(b) The fund may be used to:
(1) provide financial assistance to political subdivisions to develop water supply projects that create new water sources for the state, including:
(A) desalination projects, including marine and brackish water desalination;
(B) produced water treatment projects, other than projects that are only for purposes of oil and gas exploration;
(C) aquifer storage and recovery projects; and
(D) the development of infrastructure to transport water that is made available by a project described by this subdivision;
(2) make transfers from the fund:
(A) to the state water implementation fund for Texas established under Subchapter G or the Texas Water Development Fund II established under Subchapter L, Chapter 17; and
(B) for a purpose described by Subdivision (1); and
(3) make transfers from the fund to the water bank account established under § 15.707.

(c) The fund may be used for any purpose described by Subsection (b) under criteria developed by the board. A loan made from the fund under this subchapter may provide for repayment terms of up to 30 years, in the board’s discretion.
(d) Financial assistance for a purpose described by Subsection (b)(1):
(1) may be provided for a qualifying project under Chapter 2267, Government Code, only if the project complies with that chapter; and
(2) may not be provided for expenses associated with the maintenance or operation of a water supply project described by Subsection (b)(1).