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Environmental Loans Small Loans Program (SLP)

Within the Clean Water Fund Program (CWFP), there is a subprogram called the Small Loans Program (SLP). The SLP provides municipalities a more streamlined, less costly approach to financing wastewater treatment or storm water projects that have total estimated project costs of $2,000,000 or less.

The program is designed to reduce the interest rate on loans from the State Trust Fund (the Board of Commissioners of Public Lands) used to finance eligible projects. If the municipality takes out a loan from the State Trust Fund for the planning, design, and construction of wastewater treatment facilities or structural urban BMPs for storm water, the municipality may then apply for an interest rate subsidy through the SLP. An interest rate subsidy would help the municipality pay the interest costs on its State Trust Fund loan.

How the SLP works

  • A municipality applies to the Board of Commissioners of Public Lands (BCPL) [exit DNR] for a State Trust Fund loan to finance the planning, design, and construction of its DNR- approved wastewater project or structural urban BMP.

  • The municipality submits online to DNR an Intent to Apply (ITA) form & a Priority Evaluation and Ranking Form (PERF) on or before October 31 for the following state fiscal year (SFY) funding cycle in which it plans to submit an Interest Rate Subsidy Application.

  • While waiting for approval of its State Trust Fund loan application, or after receiving approval, the municipality submits an SLP Interest Rate Subsidy Application (Form 8700-249) [PDF] to the Department of Natural Resources (DNR), Bureau of Community Financial Assistance.

  • A DNR project manager reviews the Interest Rate Subsidy Application and determines the interest rate reduction to be applied to the municipality's project. The type of project being undertaken is one of the factors in determining the reduction. The Department of Administration (DOA) calculates the interest rate subsidy amount based on the DNR's determination. The SLP's annual subsidy costs are limited to an amount no greater than the subsidy cost that the CWFP would incur to fund the project with a regular CWFP loan.

  • The DNR project manager prepares an Interest Rate Subsidy Agreement (IRSA) that authorizes the CWFP to make annual payments to the municipality that subsidize the annual interest payments due on the State Trust Fund loan.

  • The municipality, DOA, and DNR sign the IRSA, and copies are distributed.

  • The BCPL annually mails an invoice to the municipality for its principal and interest payment due.

  • The DOA receives a copy of the invoice and sends an interest subsidy check to the municipality prior to the date payment is due on the State Trust Fund loan.

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Interest rate determination

The effective (subsidized) interest rate for projects financed through the Small Loans Program (SLP) is influenced by: STF loan term and interest rate, CWFP interest rate subsidy, and percentage of total project costs attributable to septage. If septage costs are between 0% and 100%, contact Michelle Eis at (608) 267-0490 to determine the effective (subsidized) interest rate.

PDF SLP Interest Rate Determination CWFP Interest Rate Subsidy
PDF For extremely disadvantaged municipalities who meet both of the following financial need criteria:
  • < 1,000 population
  • ≤ 65% of State median household income (MHI)
0%
PDF For disadvantaged municipalities who meet both of the following financial need criteria:
  • < 10,000 population
  • ≤ 80% of State median household income (MHI)
33%
PDF For municipalities not meeting the financial need criteria 55%

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Example of the SLP interest subsidy

The municipality obtains a State Trust Fund loan to pay for a sludge storage project costing $500,000. The term of the loan is 20 years with an annual interest rate of 6.0%.

DNR determines that the municipality's sludge storage project is a compliance maintenance project eligible for SLP subsidy payments. Assume that the CWFP program has a 5.0% market interest rate and a 3.0% subsidized interest rate available on loans for compliance maintenance projects. Based on the difference between the two interest rates, the CWFP reduces the interest rate by 2 percentage points annually for compliance maintenance projects.

Applying the same reduction to the SLP, the interest subsidy would "buy-down" the municipality's State Trust Fund loan interest rate 2 percentage points, from 6% to 4%. In this example, for the next 20 years, the DOA annually provides a check to the municipality for one-third (1/3) of the interest due on its State Trust Fund loan.

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Eligible SLP projects

The following types of projects with total estimated project costs of $2,000,000 or less are eligible:

  • A compliance maintenance project.
  • A project necessary to achieve substantial compliance with an enforceable requirement that was new or changed after May 17, 1988.
  • A project necessary to control storm water runoff rates, volumes, and discharge quality.
  • A project necessary to eliminate actual or imminent pollution of groundwater, surface water or threat to human health in unsewered areas within a municipality.
  • A project necessary for the replacement or major rehabilitation of an existing sewer collection system and necessary to maintain the integrity and performance of the treatment works serving the municipality.
  • The construction of individual systems serving one or more residences, if the municipality agrees to the requirements of s. NR 162.39(3), Wis. Adm. Code.

Ineligible SLP projects and costs

The following is a partial list of projects and costs that are ineligible for SLP subsidy (for further information see ss. NR 162.39(6) and NR 162.40(2), Wis. Adm. Code).

  • Projects costing in excess of $2,000,000.
  • Projects found to be ineligible for financing by the BCPL.
  • Laterals that transport wastewater from structures to municipally-owned or privately-owned wastewater systems.
  • Hook-up charges payable to other municipalities.
  • Sewers that only serve development not in existence as of the date of the Interest Rate Subsidy Application.
  • Storm water projects that are solely for drainage and flood control.
  • Costs included in the State Trust Fund loan that are not related to the wastewater treatment or storm water project.

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SLP requirements

Prior to preparation of the Interest Rate Subsidy Agreement (IRSA), the following must occur:

  • The municipality submits online to DNR an Intent to Apply (ITA) form & a Priority Evaluation and Ranking Form (PERF) on or before October 31 for the following state fiscal year (SFY) funding cycle in which it plans to submit an Interest Rate Subsidy Application

  • The DNR approves the facility plan for the project.

  • The BCLP executes the State Trust Fund loan.

  • The municipality submits to DNR an Interest Rate Subsidy Application (Form 8700-249) [PDF], including plans and specifications.

  • The municipality submits a proposed or an executed intermunicipal agreement in cases where two or more municipalities discharge to or through the same treatment works or structural urban BMP.

  • The municipality submits information that DNR uses to calculate the project's parallel cost percentage.

  • The municipality submits to DNR other project, financial, and utility information, as requested by the DNR project manager.

  • The State Trust Fund provides loan information to the DNR.

  • The DNR approves the plans and specifications and accepts the Interest Rate Subsidy Application.

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The SLP payment process

Each January the BCPL sends an invoice to each municipality that has a loan payment due on the following March 15th. The invoice shows the principal amount, the interest amount, and the total payment due. DOA receives a copy of the invoice, which it uses to calculate the interest subsidy payment. Prior to the March 15th loan payment date, DOA sends an interest subsidy check to the municipality for a portion of its State Trust Fund loan interest payment. The municipal clerk deposits the SLP interest subsidy check in a municipal account, then issues one check for the whole amount due to the State Trust Fund.

A municipality may prepay all or a portion of its State Trust Fund loan without penalty from January 1st to August 31st each year. A 30-day notice of prepayment is required by BCPL. DOA will adjust the remaining interest subsidy payments to reflect any prepayments.

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Advantages of the SLP

Flexible Debt Issuance - A municipality may provide a general obligation or a revenue bond pledge to the State Trust Fund.

Flexibility - The State Trust Fund offers loan terms of up to 20 years, so the municipality can select a loan alternative that best fits its financing needs. The SLP interest subsidy payments are then scheduled based on the loan terms. ...ability to make prepayments.

Streamlined Approach - The Interest Rate Subsidy Application is short, simple and offers a streamlined review process. Likewise, the State Trust Fund loan process is short and simple. ...not required to meet federal requirements.

No Issuance Costs - No fees are charged for a State Trust Fund loan or SLP Interest Rate Subsidy Agreement.

Can be used for non-PF project costs - The non-Principal Forgiveness portion of project costs may be funded using a State Trust Fund loan with a SLP Interest Rate Subsidy Agreement (IRSA).

Disadvantages of the SLP

No Hardship Assistance - The SLP has no "hardship" component to reduce interest rates below the regular CWFP interest rates.

Contact information
Direct questions about the Small Loans Program (SLP) to:
Michelle Eis
Financial assistance specialist
EL section, Bureau of CFA
608-267-0490
For information about the State Trust Fund (STF) Loan Program [exit DNR], contact:
Richard Sneider
Chief Investment Officer, CIPM
Board of Commissioners of Public Lands (BCPL)
608-261-8001

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Last revised: Friday October 06 2017