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Minnesota Legislature

Legislative audit ‘very positive’ for Public Facilities Authority

There are almost 600 cities and townships around the state that operate wastewater treatment facilities. The agency that has overseen more than $4 billion in loans and grants since 1990 to fund and maintain those facilities recently underwent an audit.

The findings of that Public Facilities Authority audit were shared with the House Capital Investment Committee Thursday, and the news was good.

“This is a rare OLA report in that it was very positive,” Sarah Delacueva, the evaluation manager with the Office of the Legislative Auditor told members. “We found that PFA is doing a good job administering these programs and we did not make any recommendations to PFA for improvement.”

The audit focused on how well the authority manages the four wastewater programs it uses to help communities finance improvements to their wastewater infrastructure. The report also looked at how those programs will be able to meet the future needs of Minnesota communities.

The auditor’s found the PFA’s management of the programs “thorough and appropriate” and estimated if current state and federal funding levels remain the same, the agency could fund more than two-thirds of the estimated $5 billion the state will need for wastewater infrastructure over the next 20 years.

“PFA is widely regarded as efficient, effective, and helpful,” the auditors wrote in their report. “Among the stakeholders we spoke with … none had anything negative to say about PFA.”

The wastewater funding programs managed by the PFA include the Clean Water State Revolving Fund which is by far the largest, distributing nearly three-quarters of the monies awarded.

This fund allows the agency to make loans at or below market interest rates. The auditor found these loans can be as much as 66 percent lower than a AAA-rated borrower would have received, resulting in millions of dollars of savings.

“For wastewater infrastructure projects that PFA financed from fiscal years 1990 to 2018, PFA loans will ultimately save Minnesota communities nearly $700 million,” the auditor’s wrote. Delacueva said that total is a conservative estimate because it assumes the borrowing communities all have an AAA credit rating, which is not the case.

Although the report does not make any recommendations for improvements to the PFA, it does have a few for the Legislature. They include changing statutory language regarding minimum interest rates and asking lawmakers to “exercise restraint” in making direct appropriations for wastewater infrastructure projects. Those appropriations can circumvent the established “comprehensive process for vetting funding recipients.”

Rep. Nels Pierson (R-Stewartville) said the report highlighted the capabilities of the PFA and the OLA.

“I’m overwhelmingly impressed with both institutions because of this specific report,” Pierson said.

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