Costs associated with loans

Costs associated with loans. (1) Interest expense. (a) Allowability of interest costs. The fund will reimburse interest expense if a loan is specifically secured for a remediation and the proceeds are applied only to the cleanup at the site. To be eligible, interest costs cannot be combined with retrofits or construction loans and shall be site specific. Reasonable money management shall be practiced to avoid unnecessary accrual of interest charges. Interest expenses shall be managed in the most cost-effective manner possible and invoices shall be paid in a timely manner to avoid interest costs or late charges. If a line of credit is used to provide funding for a remediation, clear documentation shall be provided on the disbursements and interest expenses. (b) Ineligible interest expenses. The PECFA fund shall not reimburse for the following items: 1. The opportunity cost of money or interest income or dividend income lost because of a decision to use internal funding for a remediation; 2. Interest costs which are not clearly documented; 3. Interest costs or late charges on invoices or bills. 4. Additional interest costs accrued for the use of PECFA loan proceeds to earn money or for investment purposes. 5. Interest costs which are specified in s. 292.63 (4) (c) 8. , Stats. 6. Interest costs which are ineligible under s. 292.63 (4) (cc) , Stats. (c) Maximum interest and related costs. 1. The following maximum rates are established for loans secured after January 31, 1993, and before October 15, 1997, for the purposes of a remediation: a. Interest rate shall be reimbursable at no more than 2% above the prime rate. b. Loan origination fees from the same lender shall be reimbursable only once, and at no more than 2 points of the loan principal. Where a later, larger loan is obtained to pay off a preceding loan, the origination fee for the portion of the later loan that equals the preceding principal will not be reimbursed. A duplicative loan origination fee from a subsequent lender will not be reimbursed, unless the preceding loan was terminated by a different lender. 2. The following maximum rates are established for loans secured on or after October 15, 1997, for the purposes of a remediation: a. Interest rate shall be reimbursable at no more than 1% above the prime rate. b. Loan origination fees from the same lender shall be reimbursable only once, and at no more than 2 points of the loan principal. Where a later, larger loan is obtained to pay off a preceding loan, the origination fee for the portion of the later loan that equals the preceding principal will not be reimbursed. A duplicative loan origination fee from a subsequent lender will not be reimbursed, unless the preceding loan was terminated by a different lender. (d) Annual services fees. Annual loan service fees charged on or before April 20, 1998, shall be reimbursable at no more than 1% of the unreimbursed amount and remaining available loan balance. Annual loan service fees charged after April 20, 1998, shall be reimbursable at no more than 1% of the outstanding unreimbursed loan amount. (e) Documentation. A copy of the loan agreement documenting the interest rate, loan origination fees, and other costs, shall be submitted when requested by the department. (f) Lending agreements. In lieu of the maximum rates specified in par. (d) , the department may negotiate agreements with lending institutions to obtain lower rates. The department may solicit proposals from lending institutions to supply loans for PECFA remediations. (g) Other items. In addition to the maximum rates established in par. (c) , the following shall apply: 1. Annual loan service fees shall be charged no more frequently than once annually, and at a rate of no more than 1% on the outstanding balance. 2. Original and re-estimated loan amounts, to the extent feasible, shall reflect a sound estimate of the cost to perform the remediation. Excessive estimates which result in excessive or unnecessary interest costs may not be reimbursed by the PECFA fund. (2) Minimum loan amounts. A lending institution may unilaterally establish a minimum loan amount of $100,000 or less. Minimum loan amounts of more than $100,000 and loan origination fees on minimum loans of more than $100,000 shall require prior written approval of the department.