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Environmental Loans Interest rates

The current market rate is 3.000%. The Wisconsin Department of Administration (DOA) has set the market rate at 3.000% for loans with municipal bond meetings on or after January 1, 2020, through March 31, 2020, and with a final maturity of twenty years or less.

Clean Water Fund Program (CWFP) and Safe Drinking Water Loan Program (SDWLP) subsidy buys down the market rate on loans (reduced-interest rate loans).

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 INTEREST RATE
Clean Water Fund Program (CWFP)
For the portion of eligible projects for receiving and storing septage, and capacity for treating septage; as well as for mercury remediation at wastewater treatment facilities.
0% 0%
CWFP
For eligible projects of extremely disadvantaged municipalities meeting the following financial need criteria:
  • < 1,000 population; and
  • ≤ 65% of Wisconsin Median Household Income (MHI).
0% 0%
CWFP and Safe Drinking Water Loan Program (SDWLP)
For eligible projects of disadvantaged municipalities meeting the following financial need criteria:
  • < 10,000 population; and
  • ≤ 80% of Wisconsin Median Household Income (MHI).
33% 0.990%
CWFP and SDWLP
For eligible projects of municipalities not meeting the financial need criteria.
55% 1.650%
MARKET RATE (effective 10/01/2019 thru 12/31/2019) 100% 3.000%

Competitive market rate

On a quarterly basis, the DOA assesses the market rate on which the program subsidies are based. The rate applied to the loan is the market rate in effect at the time of the municipal bond meeting (at which resolutions approving municipal obligations and Financial Assistance Agreements (FAAs) are signed/executed).

Subsidy

The CWFP and SDWLP provide subsidy to bring interest rates on loans down from the market rate established by DOA to the reduced interest rates described in the table shown above. Municipalities may receive loans at or below the market rate for publicly-owned drinking water, wastewater, and 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. The PF allocation methodology is structured to allocate PF funds to the highest priority projects of municipalities with the greatest financial need. Principal forgiveness policies are described in the annual Intended Use Plans (IUPs).

Terms

The term for a regular CWFP or SDWLP loan is twenty (20) years from the execution date of the FAA. Thirty-year financing is available for the sewer pipe portion of eligible CWFP projects.

Fixed interest rates on long-term loans

The market rate is 3.000% for loans with municipal bond meetings on or after October 1, 2019 through December 31, 2019, and with a final maturity of twenty years or less. During that quarter, the loan interest rate will be determined based on the market rate of 3.000%:

  • Municipalities with eligible CWFP pilot projects may receive loans with an interest rate as low as 0%.

  • The portion of eligible CWFP projects for receiving and storing septage, and capacity for treating septage will receive loans with an interest rate of 0%.

  • CWFP loans provided to extremely disadvantaged municipalities eligible for zero percent of the market rate will receive an interest rate of 0%.

  • CWFP and SDWLP loans provided to disadvantaged municipalities eligible for thirty-three percent of the market rate will receive an interest rate of 0.990%.

  • CWFP and SDWLP loans provided to municipalities eligible for fifty-five percent of the market rate will receive an interest rate of 1.650%.

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.

The interest rate for the portion of a 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.

If the DNR determines that a portion of a scored project is ineligible, it shall specifically identify the ineligible portions and the associated costs; or prorate the amount of financial assistance to reflect the appropriate proportion of eligible to ineligible project costs; or both.

Last revised: Monday December 02 2019