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Environmental Loans CWFP Priority Principal Forgiveness

In SFY 2019, the Clean Water Fund Program (CWFP) rolled out a new incentive called Priority Principal Forgiveness (Priority PF). To be eligible, a municipality must meet the eligibility requirements for Regular PF, as well as any additional category-specific eligibility requirements. Priority PF is awarded in addition to Regular PF with the caveat that no more than 70% of total project costs are awarded as PF.

There are three categories of Priority PF: Regionalization, Phosphorus Reduction and Energy Efficiency. The following is a discussion of the eligibility requirements, incentives available for each category and the documentation that must be provided to have Priority PF allocated to your project.

Regionalization Priority Principal Forgiveness

Eligibility
At least one publicly owned WWTP discharge must be eliminated and the flow must be redirected to a neighboring municipality. Furthermore, at least one of the municipalities involved and incurring capital improvement costs must meet the eligibility requirements for Regular PF.

Available incentive
Regionalization Priority PF will be awarded in the amount of $2,000,000 for the elimination of the first WWTP discharge, with an additional $1,000,000 awarded for each additional WWTP discharge eliminated as a part of the same project. The award will be allocated proportionally to the municipalities involved based on the costs of regionalization attributed to each municipality. Regionalization Priority PF is subject to availability and will be allocated in priority score order.

Required documentation
To receive funding, eligible applicants must indicate their eligibility within the Project Information screen of the CWFP application and submit it prior to the deadline; describe their affiliation with other municipalities involved in the project; and submit a proposed or executed intermunicipal agreement with their application. The intermunicipal agreement must include all municipalities involved in the regionalization project, must have a term for at least the life of the loan and meet all other intermunicipal agreement requirements. An executed copy of the intermunicipal agreement is required prior to loan closing.

Phosphorus Reduction Priority Principal Forgiveness

Eligibility
Eligible municipalities must meet the following criteria: serve a population of less than 10,000 or discharge less than 150 pounds of phosphorous per month (based on average flows from the last 5 years) or have an alternate phosphorus limit; be located within a TMDL area for phosphorus or have a final water quality-based effluent limit of less than or equal to 0.3 mg/L as a monthly average limit (or 0.1 mg/L as a 6-month average limit); discharge to surface water; and meet the eligibility requirements for Regular PF.

Available incentive
For applicants where the project is designed to meet the final water quality-based effluent limit for phosphorus, the Priority PF incentive will be 50% of the phosphorus-specific costs up to a cap of $1,000,000. For applicants where the project is designed to meet an interim limit for phosphorus, the Priority PF incentive will be 25% of the phosphorus-specific costs up to a cap of $500,000. Phosphorus Reduction Priority PF is subject to availability and will be allocated in priority score order.

Required documentation
Eligible applicants must provide and/or attach the following information on the Project Information screen of the CWFP online application and submit it prior to the deadline:

  • A breakout of the major components associated with the phosphorus reduction portion of the project. Include the purchase and installation costs associated with each of those components.

  • Either an estimated or an approved phosphorus cost percentage. The phosphorus cost percentage should be calculated as PP = PC/DC where PP is the phosphorus percentage expressed as a decimal; PC is the construction costs associated with the phosphorus components of the project (this should be the sum of the phosphorus cost breakout); and DC is the construction costs associated with the total design capacity.

  • A parallel cost estimate specific to the phosphorus costs. Use the parallel cost percentage (PCP) calculation method described in Attachment 2 of the “Guidance for Septage Considerations in Municipal Wastewater Facility Planning and for Application of Zero Percent Clean Water Fund Loans.” Replace the septage costs with phosphorus-specific costs.

  • Indicate whether the design of the project is intended to meet the final phosphorus limit, or an interim limit.

Energy Efficiency Priority Principal Forgiveness

Eligibility
Eligible municipalities must be the recipient of an energy efficiency incentive from Focus on Energy and must meet the eligibility requirements for Regular PF.

Available incentive
Energy Efficiency Priority PF will be awarded as a one-to-one match of the Focus on Energy incentive up to a cap of $50,000 per project. The award is based on availability and will be allocated on a first-come, first-served basis, based on the DNR’s receipt of the required documentation.

Required documentation
Applicants must provide documentation of the award incentive from Focus on Energy. This documentation is not required at the time of application submittal but must be provided prior to loan closing. Additionally, applicants who learn of a Focus on Energy award, or submit a loan application, after the deadline are still eligible for the Energy Efficiency Priority PF funds, as available. Applicants who want to claim Energy Efficiency Priority PF after submittal of their loan application, but prior to loan closing, should work with their DNR Project Manager to submit documentation and be considered for funding.

Contact information
Lisa Bushby
Clean Water Fund Program (CWFP) coordinator
608-267-7475

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Last revised: Friday June 21 2019