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Environmental Loans (EL) Unsewered projects

Providing sewer service in an unsewered community tends to create many challenges and raise many questions for a community. Financing the project is frequently a major issue that must be resolved. Read Unsewered Project Financing for detailed information on this issue.

Summary

An unsewered project is construction of a collection system or an interceptor in an area which is undeveloped or serviced by individual systems. Projects that rehabilitate or replace an existing collection system or to modify an existing treatment plant are considered compliance maintenance projects. An unsewered project that will exclusively serve future development is not eligible for Clean Water Fund Program (CWFP) financial assistance.

A CWFP application may contain costs for more than one project type. In this case, the costs are segregated so that the appropriate interest rate is applied to each type, and a blended interest rate is calculated for the project.

If a community is interested in applying for funding from the CWFP, please contact the CWFP unsewered specialist and the DNR regional basin/watershed engineer early in the planning stage. CWFP staff can assist the community with both technical and financial issues related to the community's project.

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Common issues

Eligible municipality

Eligible applicants and funding recipients, also referred to as municipalities or local governments, include: Wisconsin cities, towns, villages, counties, town sanitary districts, metropolitan sewerage districts, public inland lake protection and rehabilitation districts, and federally recognized tribes or bands in Wisconsin.

The CWFP staff can begin working with a community on its unsewered project while in the planning process phase prior to forming a district to help make sure the type of "municipality" being established is eligible for CWFP financial assistance.

Eligible project

An unsewered project is eligible for CWFP monies if it is necessary to eliminate actual or imminent pollution of groundwater, surface water, or threat to human health. A municipality must also meet the two-thirds rule requirements (described below) and the intermunicipal agreement requirement in order for the project to be eligible.

Project timing

Unsewered projects often have several timing issues that need to be coordinated. Problems sometimes occur with the timing of obtaining easements, acquiring land, the special assessment process, obtaining adequate funding, and resolving local issues.

Land access / easements

The municipality shall allow DNR access to the project site from the preconstruction phase to the final inspection. The municipality must obtain all necessary easements and permits before executing the Financial Assistance Agreement. Obtaining easements can be a lengthy process. The municipality should start the easement process as early as possible, i.e. during the design phase of a project. (For more information, see Land Ownership and Easement Rights.)

Special assessments

If a municipality intends to pledge revenues from special assessments as a means of repayment of a CWFP loan, the appeal period for contesting the assessments must be over before a loan can close. This is an area where timing can be important. The community should work with a CWFP project manager to coordinate the timing of its special assessments with its CWFP loan closing date.

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Cost eligibility

Laterals

Lateral eligibility depends on a number of factors and should be carefully considered when planning a project. A lateral is a privately-owned sewer service line, which connects an establishment to a municipal sewage collection system or privately-owned individual system.

Grinder pumps

Grinder pumps and the connecting pipe to the sewer main are eligible if they are owned and maintained by the municipality.

Individual systems

An individual systems solution in an unsewered area may be an eligible project if it meets the requirements of s. NR 162.03(2), Wis. Adm Code [exit DNR]. A municipality must own each individual system in order for the systems to be eligible for CWFP funding.

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Two-Thirds Rule

The two-thirds rule affects the eligibility of costs and the project interest rate for collection systems. To determine eligibility and interest rate, a consulting firm must provide to the DNR project manager initial flow data for the project along with the total number of proposed hook-ups, and the number of hook-ups serving residences in existence at least 20 years prior to submission of the application. Using this data, the DNR calculates the percentage of flow initiating from residences in existence for 20 years or more. A subsidized interest rate is available only to municipalities in which at least two-thirds of the initial flow will be for wastewater originating from residences that are at least 20 years old.

  • If less than 67% of the flow is from residences built at least 20 years prior to submission of the application, all the eligible unsewered costs are funded at the CWFP market rate. This includes the eligible costs for the planning, design, and construction of a collection system for a CWFP loan or an interest rate subsidy. Costs that fall under a different project type would not be affected by the two-thirds review.

  • If more than 67% of the flow is from residences built 20 or more years prior to submission of the application, most unsewered costs are funded at a percentage of the market rate - it's equivalent to a reduced-interest rate loan. Based on the system layout, sewer main interceptors, and individual systems that exclusively serve future development are ineligible for any CWFP financing.

For more detailed information on the two-thirds review, contact the CWFP unsewered specialist.

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Section 60.726, Wis. Stats.

This statute provides that certain property owners may receive a credit for working septic systems when a sanitary district (SD) issues any assessment or charges, or imposes property taxes, to construct a new sewage service system.

Liability for credits may affect a SD's ability to repay a CWFP loan. Consequently, SDs need to determine and provide an estimate of their potential liability. Sanitary districts should calculate their estimate of liability based on the guidelines below.

These guidelines are based on a literal interpretation of s. 60.726, Wis. Stats. [exit DNR]. The statute is somewhat ambiguous and is subject to different legal interpretations. A SD might, therefore, challenge the CWFP interpretation. However, even if a SD disagrees with the interpretation of the statute, it should still prepare an estimate of the district's credit liability based on the CWFP interpretation and guidelines.

  1. Sanitary Districts Created Before May 14, 1982:
    • No Credit: No credits are available to properties in these SDs under s. 60.726, Wis. Stats.
  2. Sanitary Districts Created Between May 14, 1982, and April 19, 1990:
    1. No Credit: SD has municipal obligations as defined by s. 67.01(6), Wis. Stats, that are less than one year.
    2. Possible Credit: Credits may be available to properties on which all of the following conditions exist. Credit liability for the SD would apply to charges, assessments, etc. imposed by the SD after May 14, 1982.
      1. residence with a private sewage system
      2. private sewage system installed before SD was created
      3. private sewage system installed after May 14, 1982
      4. resident provides information to the SD regarding the cost of the system
      5. SD has municipal obligations as defined by s. 67.01(6), Wis. Stats, that are greater than one year
  3. Sanitary Districts Created Between April 19, 1990, and May 14, 1992:
    Possible Credit: Credits may be available to properties on which all of the following conditions exists. Credit liability for the SD would apply to all charges, assessments, etc. imposed by the SD after April 19, 1990.
    1. residence with a private sewage system
    2. private sewage system installed before SD was created
    3. private sewage system installed after May 14, 1982
    4. resident provides information to the SD regarding the cost of the system
  4. Sanitary Districts Created After May 14, 1992:
    Possible Credit: Credits may be available to properties on which all of the following conditions exist. Credit liability for the SD would apply to all charges, assessments, etc. imposed by the SD after May 14, 1992.
    1. residence with a private sewage system
    2. private sewage system installed before SD was created
    3. private sewage system installed after May 14, 1982
    4. resident provides information to the SD regarding the cost of the system

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Contact information
Direct questions about unsewered projects and the two-thirds rule to:
Jeanne Cargill
CWFP unsewered specialist
608-267-7587

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Last revised: Monday December 10 2018