By State Rep. Dean Urdahl
Note: I have received numerous questions from constituents regarding Public Facility Authority funding. Consider this article to be an important public service, explaining just how PFA funding works.
One piece of legislation affecting many of our local towns is Public Facility Authority (PFA) funding. This money comes through a state agency – the PFA – via state bonding and is used primarily for city wells and wastewater projects throughout Minnesota.
The Committee on Capital Investment, upon which I serve, received 260 water-related requests last session totaling more than $1.8 billion. Even though some of our state dollars are leveraged with federal money, those requests greatly exceed the money available through bonding.
Some people question any level of government commitment to local water projects. While it is true that we should limit state dollars when local money can do the job, there are a couple of key factors to consider pertaining to water projects.
First, state spending sometimes is more efficient; water projects are examples. Second, state and federal requirements for drinking and wastewater must be met. Most people who use city water would pay much more in local property taxes without PFA support.
District 18B has had numerous PFA projects approved as a result of recent legislative action. They are for Annandale, Cokato, Cosmos, Dassel, Grove City, Howard Lake, Litchfield and Watkins.
There are a couple of other important points to consider with PFA funding. Some of the money is provided through grants, but most is distributed through low-interest loans. In other words, much of the money is paid back by the city.
Let me illustrate with two examples:
Grove City needs to upgrade its water treatment. A $1.5 million low-interest loan was provided to the city. Because the interest rate the state offers is so much lower than other lending sources, Grove City taxpayers will realize a savings of $400,000. The key is that this is a loan that will be repaid, but at a lower, cost-saving rate.
Meantime, Litchfield plans an expansion of its wastewater treatment facility that will allow First District to expand and economically benefit much of Central Minnesota. The loan most likely will not burden local taxpayers since Litchfield will get $6 million with no interest or payments due for 20 years.
Here’s how local taxpayers are spared: First District currently accounts for about half of the Litchfield wastewater discharge. First District is also by far the city’s biggest customer in terms of money paid for the service. Over 20 years of increased production and increased payments, the cost of the loan ought to be nearly paid off by First District.
Like it or not, we are faced with state and federal government requirements concerning water. For costly water projects, it seems fair to offer some assistance to local governments for meeting those requirements.
Dean Urdahl represents District 18B in the Minnesota House of Representatives. The district includes most of Meeker County and a portion of Wright County. This is Urdahl’s third term in the legislature after being elected in 2002, 2004 and 2006.