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<br />. <br /> <br />. <br /> <br />. <br /> <br />to Construction Fund. Once funds have been loaned, the board may adjust the interest rate, <br />extend the authorized repayment period for any project, and defer one or more annual payments <br />subject to some statutory restrictions. <br /> <br />Existing CWCB Interest Rate Policy <br /> <br />Each year the board sets a standard 30-year lending rate for Construction Fund loans that are to <br />be recommended to the General Assembly. <br /> <br />From 1973 to 1992, the board charged a fixed "service charge" of up to 5 percent to borrowers. <br />These loans typically extended over 40 years.. In 1992, the General Assembly authorized the <br />board to charge interest at a rate between zero and 7-percent. In May 1993, the board adopted <br />guidelines for setting the interest rate for a "standard" 30-year loan at 2 percent (200 "basis <br />points") less than the average yield for 30-year U.S. Treasury Bonds for the preceding 12 <br />months. <br /> <br />Lending rates are established for municipal, agricultural, and commercial projects. For <br />municipal projects, lending rates are established for low, medium, and high income service areas <br />based on median household income in the project sponsor's service area. Lending rates for <br />agricultural projects are identical to municipal low income rates. Lending rates for commercial <br />projects are higher than for the other categories. <br /> <br />For municipal low income areas, where median household income (MHI) is less than 80-percent <br />of the statewide MHI, the lending rate will be 20-percent below the standard rate. For municipal <br />medium income areas, where MHI is between 80 and II O-percent of the statewide MHI, the <br />lending rate will be the standard rate. For municipal high income areas, where the MHI is more <br />than II O-percent of the statewide MID, the lending rate will be 10-percent above the standard <br />rate. <br /> <br />For loans with maturities of 20 years or less, but more than 10 years, the rate may be reduced by <br />one quarter of one percent below the 30-year rate for that category ofIending. For loans with <br />maturities of 10 years or less, the lending rate may be reduced by one half of one percent below <br />the 30-year rate for that category. <br /> <br />In November 1997, the board changed the rate setting procedure to be based on the average yield <br />for the 30-year "A" Municipal Bond for the preceding 12 months. The board adopted the <br />following interest rates for standard loans recommended to the General Assembly in the <br />respective years of the table. <br /> <br />3 <br />