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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. 
  1. 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. 
  2. All income received by the RLF from Federal Loans (repayments, fees, penalties, proceeds from liquidation of assets, etc.) is subject to cap calculation.
  3. The amount retained by the local government is the amount collected less the amount passed-through to Commerce.
  4. Only retained program income accumulates toward the cap.
  5. 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.