09.f1 Update Regarding MPCA Clean Water Partnership Loan
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MEMORANDUM
To: Scandia Mayor and City Council
From: Amanda Johnson, City Attorney and Kyle Morell, City Administrator
Date: August 19, 2025
Re: Update Regarding the Clean Water Partnership Loan for Community Septic Systems
Background
City Staff previously brought the Council information regarding two community septic systems
that are either failing, or in need of significant improvements to meet the state standards that govern
community septic systems. The Clean Water Partnership loan program (“CWPL”) offers low-
interest loans to local units of government for implementing nonpoint-source best management
practices and other activities that target the restoration and protection of water resources such as
lakes, streams, or groundwater aquifers.
Since our last meeting, we have met with Tii Gavo HOA to discuss how this partnership would
work and we have engaged in ongoing communications with the DNR contact for the CWPL
program.
Information from DNR
Based on our communications with the DNR, here is what we have learned:
The loan repayment period starts once the project is completed.
The City would submit invoices for reimbursement from the DNR, the DNR said they
provide payments within 3-5 business days meaning the City would have minimal, if any,
carrying costs for the loan.
At this point in time the DNR has enough funds in the CWPL program to cover this project.
Information from Tii Gavo
Tii Gavo needs to start the project as soon as possible. They have some money in reserves that
could be used for a down-payment to cover the upfront legal and administrative costs the City will
spend to start the project. They understand that for the City to partner with Tii Gavo, every single
property owner in Tii Gavo would need to sign an assessment waiver with the City, allowing us to
assess the loan amount, plus our legal and administrative costs, back to the properties.
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Recommended Next Step
At this point, if the Council authorizes us to move forward, the next step would be to hold a meeting
with the Tii Gavo residents to explain the assessment waiver and get a general consensus that the
property owners will cooperate.
If that is successful, we would collect a down-payment from Tii Gavo and begin the legal work of
drafting the assessment waiver and conducting title review on the 37 properties. Tii Gavo must
provide all 37 signed assessment waivers before the City would co-sign the CWPL documents.
In addition, because the assessment amount must be known when the assessment waivers are
signed, City Staff is proposing that the legal and administrative costs be fixed costs (versus charged
out at hourly rates). This will allow each property to be assessed a flat rate covering the costs to
prepare the assessment waivers, analyze title, review executed waivers, and record waivers against
the property.
Questions for Council
Does the Council authorize City Staff to move forward?
What feedback does the Council have for staff regarding the flat rate and collecting a down-
payment up front?