Until recently, loan terms have been limited to a maximum of 20 years. An amendment to the Federal Water Pollution Control Act (FWPCA) now permits loan terms of up to 30 years, depending on the useful life of the project.
In order for a project to be eligible for a loan exceeding 20 years and up to 30 years, the useful life of the project must be greater than or equal to the loan term (s. 281.59 (9) (ad) and (ag), Wis. Stats.). The municipality or consulting engineer must submit a Design Life Calculation Worksheet demonstrating that the cost-weighted-average design life is at least equal to the requested loan term. 20-year loan terms do not require a Design Life Calculation Worksheet to be completed.
Clean Water Fund Program - Design Life Calculation Worksheet
Projects that consist solely of installation or replacement of pipeline and associated appurtenances such as pressure relief valves, cleanouts, and manholes, are exempt for the Design Life Calculation Worksheet requirement and are assumed to have a design life of 30 years or greater. All other projects must submit the CWFP - Design Life Calculation Worksheet.
In the analysis, costs for each asset or asset system (HVAC, process equipment, tanks, etc.) are multiplied by the design life of that asset, summed, and divided by the total project cost less any non-asset costs. The resulting number, truncated at the integer, provides the maximum loan duration, not to exceed 30 years.
Asset design life may not exceed the range provided for the relevant category on the worksheet, unless asset-specific documentation supports an exception. The "lifespans" tab provides recommended asset design lives compiled from various sources, but deviations are allowed from these values. The design life of assets should reflect site-specific conditions. For example, support systems such as HVAC should not be listed with a design life that exceeds the remaining design life of the structure that they serve.
Non-asset costs such as demolition, engineering, and administration should not be included in the design life calculations. The effective life of those costs is determined by the assets' lifespan. Land should also not be included in the calculation. Loans for demolition-only projects will be evaluated on a case-by-case basis.
This methodology for determining the design life of a project was established in the State Fiscal Year 2021 CWFP Intended Use Plan.
If you have questions about how to complete the Design Life Calculation Worksheet, please contact the DNR Plan Reviewer for your region.
SAFE DRINKING WATER LOAN PROGRAM – DESIGN LIFE CALCULATION WORKSHEET
Similar to the Clean Water Fund Program, the Safe Drinking Water Loan Program now also can provide loan terms up to 30 years. Projects requesting such a loan term must submit the SDWLP – Design Life Calculation Worksheet (draft). More information regarding loan terms may be found in the SDWLP Intended Use Plan.
When completing a financial assistance application, select "20+ year" under Loan Term in the Financial Section and upload the Design Life Calculation Worksheet, if applicable. The DNR Plan Reviewer will review the worksheet after application submittal. The applicant will receive notification via email once the review is complete.
The market interest rate on loan terms exceeding 20 years is currently 0.20% (20 basis points) greater than the market interest rate on loans for 20 years. This difference will change as actual market interest rates or the market rate yield curve changes.
- Clean Water Fund Program questions
- Lisa Bushby, CWFP Coordinator
- Safe Drinking Water Loan Program questions
- Greg Farmer, SDWLP Coordinator
Disclaimer of guidance: This document is intended solely as guidance and does not contain any mandatory requirements except where requirements found in statute or administrative rule are referenced. Any regulatory decisions made by the Department of Natural Resources in any matter addressed by this guidance will be made by applying the governing statutes and administrative rules to the relevant facts. Program implementation details are outlined in the governing administrative codes and statutes: §§ 281.58 and 281.59 and 281.61, Wis. Stat., and chs. NR 162 and 166, Wis. Adm. Code.