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Environmental Loans Small Loans Program (SLP)

Within the Clean Water Fund Program (CWFP), there is a subprogram called the Small Loans Program (SLP). The SLP provides municipalities a more streamlined, less costly approach to financing wastewater treatment or storm water projects that have total estimated project costs of $2,000,000 or less. Download the SLP summary and interest rates [PDF].

The program is designed to reduce the interest rate on loans from the State Trust Fund (the Board of Commissioners of Public Lands) used to finance eligible projects. If the municipality takes out a loan from the State Trust Fund for the planning, design, and construction of wastewater treatment facilities or best management practices (BMPs) for storm water, the municipality may then apply for an interest rate subsidy through the SLP. An interest rate subsidy would help the municipality pay the interest costs on its State Trust Fund loan.

How the SLP works

  • A municipality applies to the Board of Commissioners of Public Lands (BCPL) [exit DNR] for a State Trust Fund loan to finance the planning, design, and construction of its DNR- approved wastewater project or structural urban BMP.

  • The municipality submits online to DNR a notice of Intent to Apply (ITA) on or before October 31st for the following state fiscal year (SFY) funding cycle in which it plans to submit an application for interest rate subsidy.

  • While waiting for approval of its State Trust Fund loan application, or after receiving approval, the municipality submits an Interest Rate Subsidy Application (Form 8700-249) [PDF] to DNR.

  • A DNR project manager reviews the application for interest rate subsidy and determines the interest rate reduction to be applied to the municipality's project. The type of project being undertaken is one of the factors in determining the reduction. The Department of Administration (DOA) calculates the interest rate subsidy amount based on the DNR determination. The SLP's annual subsidy costs are limited to an amount no greater than the subsidy cost that the Clean Water Fund Program (CWFP) would incur to fund the project with a regular CWFP loan.

  • The DNR project manager prepares an Interest Rate Subsidy Agreement (IRSA) that authorizes the CWFP to make annual payments to the municipality that subsidize the annual interest payments due on the State Trust Fund loan.

  • The municipality, DOA, and DNR sign the IRSA, and copies are distributed.

  • The BCPL annually mails an invoice to the municipality for its principal and interest payment due.

  • The DOA receives a copy of the invoice and sends an interest subsidy check to the municipality prior to the date payment is due on the State Trust Fund loan.

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Interest rate determination

The effective (subsidized) interest rate for projects financed through the Small Loans Program (SLP) is influenced by: State Trust Fund loan term and interest rate [exit DNR], CWFP interest rate subsidy, and the portion of total project costs attributable to septage.

PDF SLP Interest Rate Determination CWFP Interest Rate Subsidy
PDF For extremely disadvantaged municipalities who meet both of the following financial need criteria:
  • < 1,000 population; and
  • ≤ 65% of Wisconsin Median Household Income (MHI).
0%
PDF For disadvantaged municipalities who meet both of the following financial need criteria:
  • < 10,000 population; and
  • ≤ 80% of Wisconsin Median Household Income (MHI).
33%
PDF For municipalities not meeting the financial need criteria 55%

Authority and laws

Section NR 162.44 of the Wisconsin Administrative Code, requires the SLP interest rate subsidies to be set in accordance with s. 281.58(8)(j) and 281.58(12)(a), Wis. Stats., and this section. 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. Most eligible CWFP project costs are funded at a percentage of the market interest rate, in accordance with s. 281.58(12), Wis. Stats.

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Example of the SLP interest subsidy

The municipality obtains a State Trust Fund loan to pay for a sludge storage project costing $500,000. The term of the loan is twenty (20) years with an annual interest rate of six percent (6%).

DNR determines that the municipality's sludge storage project is a compliance maintenance project eligible for Small Loans Program (SLP) subsidy payments. Assume that the Clean Water Fund Program (CWFP) has a five percent (5%) market interest rate and a three percent (3%) subsidized interest rate available on loans for compliance maintenance projects. Based on the difference between the two interest rates, the CWFP reduces the interest rate by two (2) percentage points annually for compliance maintenance projects.

Applying the same reduction to the SLP, the interest subsidy would "buy-down" the municipality's State Trust Fund loan interest rate two (2) percentage points, from six percent (6%) to four percent (4%). In this example, for the next twenty (20) years, the DOA annually provides a check to the municipality for one-third (1/3) of the interest due on its State Trust Fund loan.

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Eligible SLP projects

The following types of projects with total estimated project costs of $2,000,000 or less are eligible:

  • A compliance maintenance project.
  • A project necessary to achieve substantial compliance with an enforceable requirement that was new or changed after May 17, 1988.
  • A project necessary to control storm water runoff rates, volumes, and discharge quality.
  • A project necessary to eliminate actual or imminent pollution of groundwater, surface water or threat to human health in unsewered areas within a municipality.
  • A project necessary for the replacement or major rehabilitation of an existing sewer collection system and necessary to maintain the integrity and performance of the treatment works serving the municipality.
  • The construction of individual systems serving one or more residences, if the municipality agrees to the requirements of s. NR 162.39(3), Wis. Adm. Code. [exit DNR].

Ineligible SLP projects and costs

The following is a partial list of projects and costs that are ineligible for SLP subsidy (for further information see ss. NR 162.39(6) and NR 162.40(2), Wis. Adm. Code [exit DNR]).

  • Projects costing in excess of $2,000,000.
  • Projects found to be ineligible for financing by the BCPL.
  • Laterals that transport wastewater from structures to municipally-owned or privately-owned wastewater systems.
  • Hook-up charges payable to other municipalities.
  • Sewers that only serve development not in existence as of the date of the Interest Rate Subsidy Application (Form 8700-249) [PDF].
  • Storm water projects that are solely for drainage and flood control.
  • Costs included in the State Trust Fund loan that are not related to the wastewater treatment or storm water project.

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SLP requirements

Prior to preparation of the Interest Rate Subsidy Agreement (IRSA), the following must occur:

  • The municipality submits online to DNR a notice of Intent to Apply (ITA) on or before October 31st for the following state fiscal year (SFY) funding cycle in which it plans to submit an application for interest rate subsidy.

  • The DNR approves the facility plan for the project.

  • The BCLP executes the State Trust Fund loan.

  • The municipality submits to DNR an Interest Rate Subsidy Application (Form 8700-249) [PDF], including plans and specifications.

  • The municipality submits a proposed or an executed intermunicipal agreement in cases where two or more municipalities discharge to or through the same treatment works or best management practices (BMP).

  • The municipality submits information that DNR uses to calculate the project's parallel cost percentage.

  • The municipality submits to DNR other project, financial, and utility information, as requested by the DNR project manager.

  • The State Trust Fund provides loan information to DNR.

  • The DNR approves the plans and specifications and accepts the application for interest rate subsidy.

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The SLP payment process

Each January the BCPL sends an invoice to each municipality that has a loan payment due on the following March 15th. The invoice shows the principal amount, the interest amount, and the total payment due. DOA receives a copy of the invoice, which it uses to calculate the interest subsidy payment. Prior to the March 15th loan payment date, DOA sends an interest subsidy check to the municipality for a portion of its State Trust Fund loan interest payment. The municipality deposits the SLP interest subsidy check in to its account, then issues one check for the whole amount due to the State Trust Fund.

A municipality may prepay all or a portion of its State Trust Fund loan without penalty from January 1st to August 31st each year. A thirty-day (30-day) notice of prepayment is required by BCPL. DOA will adjust the remaining interest subsidy payments to reflect any prepayments.

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Advantages of the SLP

Flexible debt issuance - A municipality may provide a general obligation or a revenue bond pledge to the State Trust Fund.

Flexibility - The State Trust Fund offers loan terms of up to twenty (20) years, so the municipality can select a loan alternative that best fits its financing needs. The SLP interest subsidy payments are then scheduled based on the loan terms. Allows prepayments of all or a portion of the municipality's State Trust Fund loan.

Streamlined approach - The application for interest rate subsidy is short, simple, and offers a streamlined review process. Likewise, the State Trust Fund loan process is short and simple. Loans from the State Trust Fund (the Board of Commissioners of Public Lands) are not required to meet federal requirements. (Whereas Clean Water Fund Program applicants and their prime contractors and subcontractors must comply with federal requirements such as Davis-Bacon and Related Acts (DBRA), and utilizing disadvantaged business enterprises (DBEs).)

No issuance costs - No fees are charged for a State Trust Fund loan or a Small Loans Program (SLP) Interest Rate Subsidy Agreement (IRSA). (A Clean Water Fund Program administrative fee, if one is imposed, shall be included in the biennial finance plan established under s. 281.59 (3), Wis. Stats. [exit DNR], which is approved by the building commission under s. 13.48, Wis. Stats. [exit DNR])

Can be used for non-PF project costs - The non-principal forgiveness portion of project costs may be funded using a State Trust Fund loan with a SLP IRSA.

Disadvantages of the SLP

The SLP has no "hardship" component to reduce interest rates below the regular CWFP interest rates. The SLP's annual subsidy costs are limited to an amount no greater than the subsidy cost that the Clean Water Fund Program would incur to fund the project with a regular CWFP loan.

Contact information
Direct questions about the Small Loans Program (SLP) to:
Kevin Olson
608-266-9955
For information about the State Trust Fund (STF) Loan Program [exit DNR], contact:
Richard Sneider
Chief Investment Officer, CIPM
Board of Commissioners of Public Lands (BCPL)
608-261-8001

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Last revised: Friday October 04 2019