Aid_Content Page_Interest rates

Interest rates

The Clean Water Fund Program (CWFP) and Safe Drinking Water Loan Program (SDWLP) provide subsidy to bring interest rates on loans down from the market rate established by the Wisconsin Department of Administration (DOA) to the reduced interest rates described in the table shown below. The fixed interest rate applied to the loan is based on the market rate in effect on the day the municipal governing body signs the financial assistance agreement (FAA).

Interest rate determination

This table shows determination of the loan interest rate by project type, based on the current market rate.
PROJECT TYPE % of MARKET RATE ≤ 20 YR TERM 21-30 YR TERM
CWFP and SDWLP
For eligible projects of municipalities not meeting the financial need criteria.		 55% 2.145% 2.255%
CWFP and SDWLP
For eligible projects of disadvantaged municipalities meeting the following financial need criteria:
  • < 10,000 population; and
  • ≤ 80% of Wisconsin's Median Household Income (MHI).
 33% 1.287% 1.353%
CWFP
For eligible projects of extremely disadvantaged municipalities meeting the following financial need criteria:
  • < 1,000 population; and
  • ≤ 65% of Wisconsin's MHI.
 0% 0% 0%
CWFP
For the portion of eligible projects for receiving and storing septage and capacity for treating septage, and non-traditional pilot projects, e.g., water quality trading.		 0% 0% 0%
MARKET RATE (effective 04/01/2024) 100% 3.900% 4.100%

Effective April 1, 2024, the market rate for loans of 20 years or less will remain at 3.90% and the market rate for loans longer than 20 years and of up to 30 years will remain at 4.10%.

Market rate

On a quarterly basis, DOA assesses the market rates on which the program subsidies are based. The market rate for loans with terms longer than 20 years will be slightly higher than the market rate for 20-year loans. Note that DOA reserves the right to make an increase, if needed, to market rates at any time

Subsidy

Most eligible project costs are funded at a percentage of the market rate. Program subsidy buys down the market rate on loans (reduced interest rate loans). Municipalities may receive subsidized loans for eligible drinking water, wastewater, and water-quality-related storm water infrastructure projects.

Some municipalities may also be eligible for additional subsidy in the form of principal forgiveness (PF). PF is comparable to a grant because it reduces the size of the loan, thus reducing annual principal and interest payments. Note: In other states, PF may be referred to as partial loan forgiveness.

Loan terms

Loan terms are typically 20 years. Loan terms of up to 30 years are available for projects that submit documentation supporting a useful life of 20+ years and in which the DNR concurs with that useful life determination. The loan terms cannot be greater than the useful life of the project.

MHI and population

The Environmental Loans programs use a municipality’s median household income (MHI) and population size to determine the amount of interest rate subsidy. The MHI and population data can be accessed from the Environmental Loans Data Sources web page.

For State Fiscal Year (SFY) 2025 Projects:

  • Wisconsin State MHI = $72,458
  • 80% of State MHI for determinations = $57,966
    • Municipality's MHI must be $57,966 or less to meet the 80% of MHI criterion for program determinations.
  • 65% of State MHI for determinations = $47,098
    • Municipality’s MHI must be $47,098 or less to meet the 65% of MHI criterion for program determinations.

For SFY 2024 Projects:

  • Wisconsin State MHI = $67,080
  • 80% of State MHI for determinations = $53,664
    • Municipality's MHI must be $53,664 or less to meet the 80% of MHI criterion for program determinations.
  • 65% of State MHI for determinations = $43,602
    • Municipality’s MHI must be $43,602 or less to meet the 65% of MHI criterion for program determinations.

For SFY 2023 Projects:

  • Wisconsin State MHI = $61,747
  • 80% of State MHI for determinations = $49,397
    • Municipality's MHI must be $49,397 or less to meet the 80% of MHI criterion for program determinations.
  • 65% of State MHI for determinations = $40,135
    • Municipality’s MHI must be $40,135 or less to meet the 65% of MHI criterion for program determinations.

MHI cutoff clarification

All MHI calculations used to determine the subsidized interest rate will be rounded to the third place after the decimal. This policy is truer to language in sections of the CWFP and SDWLP statutes that read XX% or less. (e.g., 80.0001% would be equal to 80.000%; 80.0005% would be equal to 80.001% and considered greater than 80.000%.)

Authority and laws

Most eligible project costs are funded at a percentage of the market interest rate, in accordance with ss. 281.58(12) and 281.61(11), Wis. Stats., and ss. NR 162.11 and 166.13, Wis. Adm. Code. In the CWFP, a portion of a project may be at the market interest rate, depending on the project’s parallel cost percentage. The interest rate for the portion of a CWFP project that provides facilities for receiving and storing septage and capacity for treating septage is zero percent, in accordance with s. 281.58(12)(a)5., Wis. Stats.

Contact information
For information on this topic, contact:
DOA Capital Finance Office staff at DOAEIF@wisconsin.gov