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Interest Rate

Servicing Fee

Loan Term

Applicant Type

Total

Standard Tax-Exempt (up to 20 years)

All All All

1.75% 2.75% 2.75%

0.25% 0.25% 0.25%

2.00% 3.00% 3.00%

Extended (21 to 30 years based on useful life)

Taxable Loans (up to 20 years)

The SRF program monitors the market to ensure that our loan interest rates are appropriate relative to the program’s cost of funds. Interest rates in both the Treasury and municipal markets have been trending higher over the past year, as evidenced by Bloomberg’s BVAL AAA Municipal Curve, which uses real-time trades and sources to track movement in the municipal market 9 . The graph in Figure 1 below shows the average 20-year BVAL yield for each month since January 2022, compared to the SRF Program’s Standard Term interest rate.

Figure 1: 20-year Bloomberg BVAL AAA Municipal Yields (Monthly Average)

SRF loan interest rates are established by considering factors including, but not limited to:

1. The Program’s interest rate cost of funds; 2. Availability of other SRF funds; 3. Prevailing market interest rates of comparable non-SRF loans; and 4. The long-term financial viability of the SRF. Program staff will continue to monitor market conditions to ensure that SRF loan interest rates satisfy these and other provisions. Any changes to SRF loan interest rates will be communicated in the Intended Use Plan. Loan Fees . A 0.5% origination fee is assessed on the full loan amount for new CWSRF construction loans, with a maximum amount of $100,000. No origination fees are assessed on planning and design loans. A .25% loan servicing fee is assessed on construction loans. Payment of the loan servicing fee is made semi-annually with scheduled interest payments (June and December). Loan servicing fees are calculated based on the outstanding principal balance. Financing Term . Loan terms can be up to 30 years. The initial determination of the length of the term is based on a calculation of the average useful life of the entire project, determined by the applicant’s consulting engineer and approved by DNR. Any project may request an extended term.

9 The BVAL® AAA Municipal Curves are updated daily and is publicly available on the Municipal Securities Rulemaking Board’s (MRSB) Electronic Municipal Market Access (EMMA) website.

IOWA SRF INTENDED USE PLANS 2023 - CWSRF | Page 16