Hardship Financial Assistance Calculation

Clean Water Fund Program

The Clean Water Fund Program (CWFP) provides hardship financial assistance to reduce residential user charges to an amount equal to 2% of the municipality's median household income (MHI). Assistance is provided in the form of a reduced interest rate loan.

If reducing the loan interest rate to 0% is not sufficient to decrease residential user costs to 2% of the municipality's adjusted MHI, the CWFP may award a grant of up to 70% of the costs eligible for the below-market interest rate. If the CWFP provides the municipality with a grant for a portion of the project, the remaining costs eligible for CWFP below-market rate interest are at a 0% loan.

Other Factors

When determining the amount of CWFP assistance needed to bring residential user charges down to 2% of the municipality's adjusted MHI, the CWFP must consider any grants the municipality receives from another source, such as Rural Development or the Department of Commerce. If the amount of grant assistance received from another source would bring the charges below 2% of the MHI, the CWFP must deduct the appropriate amount of extra grant assistance from the total project costs as ineligible for CWFP funding.

The final determination of the amount of hardship assistance that can be provided, if any, is made when the Financial Assistance Agreement (FAA) is prepared. This determination is a one-time decision. If a municipality is not eligible for hardship financial assistance at the time of the FAA, and the municipality receives a regular CWFP loan, the CWFP cannot later refinance that loan with hardship financial assistance if the municipality meets the criteria in future years.

Calculating The Assistance

To approximate the type and amount of assistance a municipality could receive through the CWFP, use the hardship calculation worksheet (PDF, 10KB). The worksheet assumes the availability of a financial calculator or spreadsheet program capable of calculating interest, payments, and interest rates. As an alternative, the municipality may also submit a Hardship Financial Assistance Preliminary Calculation Request form (PDF, 6KB) to determine whether or not the municipality is eligible for hardship assistance as well as the type and amount of financial assistance the CWFP may provide. The information on the form must be as complete and accurate as possible. The department will notify the municipality of the results of the calculation.

For more information, contact a CWFP project manager or contact hardship specialist Jeanne Cargill.