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Legislative News and Views - Rep. Dean Urdahl (R)

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The ABCs about PFA funding and how it saves taxpayers

Friday, February 26, 2010
By State Rep. Dean Urdahl I often receive questions regarding news releases my office regularly distributes to announce a local municipality has been awarded money for a water-related project, saving taxpayers hundreds of thousands – or even millions – of dollars. Here’s how it works: The funding is provided mainly through low-interest loans from the Minnesota Public Facilities Authority. The PFA helps finance infrastructure projects that might otherwise be unaffordable to communities if they had to borrow money for the projects at typical market rates. The bonds are paid off through loan payments made by cities that receive the projects. I am a member of the Capital Investment Committee that authorizes funding for the PFA, which manages of three revolving loan funds and other programs to help local units of government construct facilities for clean water – including wastewater, storm water and drinking water – and other kinds of essential public infrastructure projects. Cities apply for funding and the PFA ranks them based on need and then distributes financing packages accordingly. The PFA has financed more than $2.5 billion in public infrastructure projects since its inception in 1987. This is an especially important tool in today’s economy as cities face tight budget constraints and families cannot afford a heavier tax burden. The low-interest loans are very helpful in holding down property taxes. Most cities in District 18B have either recently received PFA funding or currently are seeking financing. For example, Litchfield recently gained approval for $15 million to use in water-related projects. The PFA estimates low-interest loans will save the city’s taxpayers more than $10.7 million in interest costs when compared with current market rates. Cosmos taxpayers save nearly $600,000 in costs relating to water main replacement and looping. Eden Valley taxpayers save more than $225,000 to replace a water main in northeast and southeast parts of town. Dassel taxpayers save more than $235,000 to complete a water-related project. Public infrastructure remains a top priority for the state – even during dips in the economy – and we must uphold our support for public infrastructure that preserves the environment, protects public health and promotes economic growth. The current recession puts greater pressure on our cities and, in turn, increases competition for state funding. -30- 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 fourth term in the Legislature after being elected in 2002, 2004, 2006 and 2008.
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