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Clean Water Fund Program

Summary Common Issues
Cost Eligibility Section 60.726, Wis. Stats

SUMMARY

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. If a community is interested in applying for funding from the Clean Water Fund Program (CWFP), please contact the CWFP unsewered specialist and the Department of Natural Resources basin engineer early in the planning stage. CWFP staff can assist the community with both technical and financial issues related to the community's project. (See project managers).

An unsewered project constructs 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. 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.

COMMON UNSEWERED ISSUES

Eligible Municipality - Only an eligible municipality may apply for a CWFP loan to finance the construction of an eligible project. "Municipality" is defined in s. 281.59(1)(c), Wis. Stats., as "any city, town, village, county, town sanitary district, public inland lake protection and rehabilitation district, metropolitan sewerage district or any federally recognized American Indian tribe or band in the state."  If a community does not fit the definition of "municipality," the CWFP cannot accept the community's application. However, the CWFP can begin working with the community on its project while in the planning process phase prior to forming a "municipality."

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 on this web page and 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. (See below for more information on land and special assessments, and see "Timeline for a Typical Project" to get an idea of how the CWFP application process fits into a project.)

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. (See Land for more information on land and easements issues.)

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.

Capitalized interest - Unsewered municipalities are allowed to capitalize interest on CWFP loans during the construction phase of the projects. Capitalization of interest increases the total debt service of the municipality over the term of the CWFP loan. To determine the impact on a specific project, please contact the Environmental Improvement Fund's Loan Officer, Ed Brinson at the Department of Administration during the early stages of the loan application process.

Cost Eligibility -

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

  • Individual systems may be an eligible project if it meets the requirements of s. NR 162.03(2), Wis. Stats. A municipality must own each individual system in order for the systems to be eligible for CWFP funding. (Ch. NR 162 is available through the Statutes and Codes page.)

  • 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 CWFP 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 prior to October 18, 1972. Using this data, the percentage of flow initiating from residences in existence prior to October 18, 1972 is calculated. 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 pre-October 18, 1972, residences.

    • If less than 67% of the flow is from residences built before October 18, 1972, 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 regular loan and hardship loan or 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 before October 18, 1972, most unsewered costs are funded at 70% of the CWFP market rate. 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 a CWFP project manager or 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, 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 essentially based on a literal interpretation of s. 60.726, Wis. Stats. 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

      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
    Last Revised: Monday February 18 2008
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