09-23-24 City Council Agenda Packet

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CITY COUNCIL REGULAR MEETING STAFF REPORT AGENDA ITEM 6A STAFF ORIGINATOR: Michael Grochala, Community Development Director MEETING DATE: September 23, 2024 TOPIC: Consider Resolution No. 24-125, Accepting offer of the Minnesota Public Facilities Authority to Purchase General Obligation Revenue Note Authorize Execution of Project Loan Agreement VOTE REQUIRED: Simple Majority INTRODUCTION Staff is requesting City Council authorization to accept offer to purchase note and authorize execution of project loan agreements with the Minnesota Public Facilities Authority (MPFA) related to the construction of the water treatment facility. BACKGROUND During the 2023 Legislative session $13,500,000 was appropriated to the MPFA for a grant to the City of Lino Lakes for the water treatment facility. Additionally, the City is receiving a $3 million grant through the MPFA Emerging Contaminants program along with a low interest loan through the Drinking Water Revolving Loan Program for the balance of the project cost ($15,996,190). The MPFA has prepared the grant and loan agreement for City execution. Kennedy & Graven, the City's Bond Counsel, has reviewed the agreement and prepared the attached resolution for council consideration. The PFA will be providing a low interest loan (1.947%) to finance the non -grant funded portion of the project. The City will issue and the PFA will purchase a General Obligation Water Revenue Note for the principal amount to secure the loan. In issuing the loan the City is pledging water utility revenues to pay the principal and interest on the note. In the event these are insufficient the City pledges ad valorem tax revenue to support the debt service. As a result of prior City Council actions to plan for and adjust utility rates, water revenues are anticipated to be sufficient to cover existing and proposed debt service. Once the agreements are executed the City will be able to submit for reimbursement of costs previously incurred for design and construction of the building.