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Environmental Loans Loan repayment

The Financial Assistance Agreement (FAA) contains a hypothetical loan repayment schedule, labeled Exhibit B, which is based on the assumption of full disbursement of the loan on the loan closing date. This schedule is provided for illustrative purposes only.

The loan repayment schedule depends on the loan amount and the dates that the money is drawn. The repayment schedule is not final until the municipality takes its last draw on the loan. After the final loan disbursement, the Environmental Loans Program will send the municipality a final repayment schedule for the remaining life of the loan.

Maximum term

The maximum term for a Clean Water Fund Program (CWFP) or Safe Drinking Water Loan Program (SDWLP) loan is twenty (20) years from the execution date of the Financial Assistance Agreement (FAA). Loans can be written for shorter terms if requested by the municipality, e.g. to match the term of special assessments for the project.

Interest payments

Interest begins to accrue from the date of each loan disbursement. Interest is payable each May 1st and November 1st. In general, the first interest payment is due the May 1st or November 1st following the loan closing date.

If a loan closing takes place within 60 days of May 1st or November 1st, the first scheduled interest payment will be deferred until the following interest payment date.

Principal payments

Principal payments are scheduled to begin the May 1st following the substantial completion date specified in the FAA. The substantial completion date is the estimated date when the system is expected to be operational. The substantial completion date is established at the time the FAA is drafted.

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Amortization

Loans are normally amortized on a level principal and interest basis over the term of the loan. For loans secured by special assessments, the municipality may request that the loan amortization schedule be based on level principal payments in order to more closely match the special assessment revenue stream.

Prepayment

The standard language in the FAA and the bond documents does not allow prepayments on the CWFP/SDWLP loan. For loans secured by special assessments, there typically is a requirement that prepaid special assessments be applied to reduce either the CWFP/SDWLP debt or another debt on the project.

Payment due notices

The Environmental Loans Program sends an invoice to the municipality for principal and interest payments due. The invoices are typically sent about 30 days prior to the loan payment due dates of May 1st and November 1st.

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Delinquent payments

Any scheduled payment not received on or before the payment due date is considered delinquent and puts the municipality in "default" status. Defaulting on the loan may adversely affect the municipality's credit rating and its future borrowing ability. Wisconsin statutes and the FAA contain various remedies available to the Environmental Loans Program to collect delinquent payments from municipalities.

All payments must be received by 4:30 p.m. on the due date

All payments must be received by 4:30 p.m. on the due date! By collecting all payments when due, the EIF Program can maintain its favorable credit rating, which in turn results in lower interest cost to municipalities. If a payment is not received, or is late, the Department of Administration (DOA) may implement loan default procedures.

Contact information
Direct questions about payments to:
Aaron Heintz
Finance program administrator
State of Wisconsin DOA Capital Finance Office
608-266-0739
or
Kyle Kabara
Capital finance officer
State of Wisconsin DOA Capital Finance Office
608-267-2734

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Last revised: Thursday June 29 2017