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Environmental Loans (EL) Bond swap

The Wisconsin Department of Administration (DOA) may request an exchange of municipal obligations (bond swap). The purpose of this action is to adjust the bond/note for any amount that was not drawn by the municipality from the original loan amount.


Note: We close out projects (see project closeout). We close loans (see loan closing).

At the time of a loan closing, a municipality must issue a bond/note to the State of Wisconsin Environmental Improvement Fund (EIF) as security for the loan. After the DNR project closeout process is complete, the DOA may request the municipality to replace the original bond/note with a new version of the bond/note. The purpose of this action is to adjust the bond for any amount that was not drawn by the municipality from the original loan amount.

The amount on the new replacement bond/note is equal to the outstanding balance of the EIF loan at the time of the bond swap. The outstanding loan balance is equal to the total loan disbursements minus any principal payments that the municipality has already made on the loan.

This bond swap is done after DNR determines the municipality's project has met the project closeout requirements, and the EIF makes the final loan disbursement on the project. By replacing the bond/note, the municipality will then show a lesser amount of issued bonds/notes. This process is typically done only if a municipality does not draw all of its loan funds.

Bond swap process

  1. DOA prepares the new replacement bond/note for an amount that equals the current outstanding amount of the EIF loan.
    • Several minor changes are made in the original bond/note language to reflect the final loan amount and the replacement of the original bond/note.
    • A black-lined version of the new bond/note is created so that the municipality can review the changes before signing the new replacement bond/note.
  2. DOA sends the municipality a:
    • transmittal letter with directions for signing the new replacement bond/note (the municipality's bond counsel also receives a copy of the letter);
    • new bond/note to be signed and sealed by the municipality;
    • black-lined version of the new bond/note for informational purposes;
    • an account statement showing all loan disbursements and repayments;
    • FINAL loan repayment schedule of remaining principal and interest payments.
  3. The municipal officials authorized in the original municipal obligation resolution must sign and seal the replacement bond/note and return it to DOA.

  4. Upon receipt of the signed replacement bond/note, DOA returns the original bond/note to the municipality marked "canceled and reissued."

Multiple municipal obligations (bonds/notes)

A bond swap may not always consist of just one bond or note. In some cases, multiple bonds/notes may be involved, depending on how many bonds/notes were originally issued for the loan. For example, if a municipality has issued both a revenue bond and a general obligation note as security for an EIF loan, then both of these may need to be replaced to true-up the bonds/notes to the outstanding loan balance.

Contact information
Direct questions about municipal obligations and bond/note swaps to:
Aaron Heintz
Finance program administrator
State of Wisconsin DOA Capital Finance Office

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Last revised: Thursday June 29 2017