Financial Assistance Agreement and Loan Closing Process
Clean Water Fund Program and Safe Drinking Water Loan Program
The following is intended to provide general guidance for the financial assistance agreement (FAA) and the loan closing process. Direct project-specific questions to the assigned DNR loan project manager.
The financial assistance agreement is a legally binding, written agreement between the municipality, the DNR and the Department of Administration (DOA) that awards Clean Water Fund Program (CWFP) or Safe Drinking Water Loan Program (SDWLP) financial assistance. The FAA contains the terms and conditions of receiving financial assistance as well as the terms and conditions of repaying the loan.
The municipality will need to sign the agreement and the bond documents at a municipal meeting prior to the scheduled closing date of the CWFP/SDWLP loan. The DOA will wire the municipality's first disbursement of loan funds on the day of loan closing.
Bond Counsel
Although it is not required to list a bond counsel at the time of application, prior to loan closing, a bond counsel must be retained. A bond counsel experienced in Wisconsin municipal debt issuance must be hired to prepare the bond documents and the bond transcript for the loan; they prepare legal documents for the municipal obligations (e.g., legal opinion, bond resolution, tax certificate, closing certificate, etc.).
Evidence of qualifications, experience, and liability insurance coverage are required by the Environmental Improvement Fund (EIF). Please inquire with DOA for an updated list of Wisconsin approved bond counsels. Contact the DOA Capital Finance Office at DOAEIF@wisconsin.gov.
Pre-FAA Requirements
The following requirements must be met before the loan project manager can prepare the municipality's financial assistance agreement.
1. DNR loan project manager completes all application reviews.
2. DNR plan reviewer approves the plans and specifications for the project.
3. DNR approves the parallel cost percentage, for projects being financed through the CWFP.
4. DOA determines whether the municipality has the financial capacity to assure sufficient revenue to operate and maintain the project and to pay the debt service on the obligations that it issues for the project.
5. Municipal water rates and operating rules are approved for projects being financed through the SDWLP.
- The Public Service Commission of Wisconsin (PSC) regulates all Wisconsin water system rates. The EIF requires a copy of the most recent PSC-issued order authorizing water rates and operating rules.
6. For stormwater projects being funded under the CWFP, the municipality adopts local regulations for construction sites, adopts a municipal stormwater management plan and adopts an ordinance for new development and redevelopment.
7. DNR Environmental Loans staff and the municipality determine that all applicable federal bond regulations are met.
8. A loan project manager determines that the municipality has submitted all necessary documentation for the project, including:
- bid and construction contract documentation;
- an executed copy of the architectural/engineering (A/E) contract(s);
- draft legal documents related to the authorization and issuance of bonds, typically submitted by the bond counsel;
- a statement of the payoff amount, if refinancing a portion of a debt or an entire debt;
- the first request for disbursement form and supporting invoice documentation;
- force account certification, if costs are requested;
- a copy of the title or warranty deed for land purchased for the project, if land purchase costs are requested;
- legal statement or opinion from applicant's attorney on land ownership and easement rights necessary for the project;
- an executed copy of the intermunicipal agreement(s), if necessary for the project:
- American Iron and Steel (AIS) Certification;
- Disadvantaged Business Enterprise (DBE) Good Faith Certification;
- final Green Project Reserve (GPR) cost documentation, including applicable business case;
- Federal Equivalency Projects Assurances and Certification Form 8700-201, mandatory for CWFP and SDWLP projects designated as federal equivalency projects;
- initial flow documentation, if an unsewered project;
- estimate of the parallel cost percentage, for projects being financed through the CWFP;
- Cost and Effectiveness Certification, for projects being financed through the CWFP;
- adopt and implement a sewer use ordinance (SUO) and user charge system (UCS), for projects being financed through the CWFP;
- a copy of the water rate order approval, for projects being financed through the SDWLP; and
- a copy of the resolution adopting the rate increase, for projects being financed through the SDWLP.
Loan Closing Process
When all the pre-FAA requirements are met, the loan project manager will work with the municipality to establish a loan closing date. This date is normally the second or fourth Wednesday of the month. Once this date is established, the loan project manager can prepare the financial assistance agreement and loan-closing schedule.
At least two weeks before the scheduled CWFP/SDWLP loan closing, the municipality must hold a meeting at which they will execute the FAA and documents prepared by the bond counsel to issue a bond/note to the CWFP or SDWLP as security on the loan. This issuance mirrors the process municipalities must follow for any issuance of debt, either in the public or private markets.
FAA Terms and Conditions
Upon entering into an FAA, the municipality agrees to the terms and conditions set forth in ch. NR 162.12, Wis. Adm. Code, for CWFP projects or ch. NR 166.14, Wis. Adm. Code, for SDWLP projects. A municipality is also required to do the following:
- comply with loan disbursement requirements, including:
- set up a non-interest-bearing account into which financial assistance wire transfers will be sent when the DOA disburses loan monies to the municipality;
- within three working days of receipt of CWFP or SDWLP monies, apply the monies to project costs such as paying invoices, refinancing debt, and reimbursing municipal accounts;
- send DOA a copy of the municipal audit report or the municipality's year-end financial statements for each fiscal year that the CWFP or SDWLP loan is outstanding;
- repay the loan over a term (typically twenty (20) years, but not to exceed thirty (30) years, if permitted, based on project useful life) from the date of the FAA; and
- construct the project according to approved plans and specifications.
Contact Information
For information on financial assistance agreements, contact:
Blythe Cassidy, FAA specialist
For information on the loan closing process, contact:
Kim Leizinger, closing specialist