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IMPORTANT: As of July 1st, 2011, functions once performed by the Wisconsin Department of Commerce have been moved to other state agencies and the Wisconsin Economic Development Corporation. The former Commerce web site will continue to exist for the next several months as resources are moved to new web site locations. We will make every attempt possible to direct our users to the new locations as web resources are moved.
RLF Cap Process Description
The "Cap" - How does the Revolving
Loan Fund cap system work?
The
cumulative program income retained by a local government shall not
exceed population-based limits established by Wis. Stats. Comm. 108.16
(2) (a) and Comm. 108 (3).
In a nutshell: "The cap is a limit on the amount of retained program income the community may accrue from Federal loans."
An
easy way to remember this is that the cap system counts money coming
into the Revolving Loan Fund from the State via loan repayments.
- Cap only applies to Federal Loans,
i.e., the primary loans funded directly by grants from Commerce.
Neither revolved funds nor account balances count in the cap
calculations.
-
All income received by
the RLF from Federal Loans (repayments, fees, penalties, proceeds from
liquidation of assets, etc.) is subject to cap calculation.
- The amount retained by the local government is the amount collected less the amount passed-through to Commerce.
- Only retained program income accumulates toward the cap.
- Measuring retained program income begins at the inception of the RLF.
Program
income retained to date is tested against the RLF's current limit
("cap") to determine if the cap has been reached. Each RLF's initial
cap is the population-based limit cited above, with some grandfathered
exceptions. Later, subject to certain conditions, the RLF may request a
cap increase be granted. A new, higher limit may be awarded after
review of the RLF administration.
Cap status
determines the rate at which the local government returns money to
Commerce. The process of returning payments to Commerce as they are
realized is termed pass-through. Pass-through payments are the source used by Commerce to fund the Public Facilities Economic Development Program.
- If the amount of program income retained is less than the cap, the RLF is considered to be Below Cap and no pass-through is required.
- If the amount of program income retained is exactly equal to the cap, the RLF is considered to be At Cap and no pass-through is required. Note that successive payments will exceed the cap.
- If the amount of program income exceeds the cap, one of two statuses will apply:
- If the RLF carries the initial, population-based cap, pass-through is 100% - every dollar collected goes to Commerce.
- If the RLF has been granted a cap increase, retained program income is tested against the granted cap.
- If
the amount of program income is less than the granted cap, pass-through
is 50% - every other dollar collected goes to Commerce.
- If the amount of program income exceeds the granted cap, pass-through is 100% - every dollar collected goes to Commerce.
If you have any questions regarding this description, please
contact Pete Norman at Peter.Norman@WI.Gov or call
608-267-5100.
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