08.b MPCA Clean Water Loan Partnership Resolution 11-18-25-101
Staff Report
Date of Meeting: November 18, 2025
To: Wastewater Committee Members
From: Kyle Morell, City Administrator
Re: MPCA Clean Water Partnership Loan Resolution No. 11-18-25-10
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Background
At the July Work Session, the Council was asked to consider applying for an MPCA Clean
Water Partnership Loan (CWPL) on behalf of the Tii Gavo Homeowners Association (HOA).
The Association is under a Corrective Action from the MPCA and is not eligible for state grant
funding because the wastewater system is privately owned and operated. The Loan program
requires the City to apply for the loan on behalf of the HOA and guarantee its repayment.
Council directed staff to work with the HOA on the loan application, provided the HOA paid all
loan costs.
At the September Regular Meeting, staff presented Council with an Agreement, drafted by our
City Attorney, between the City and the HOA, outlining each party's roles and responsibilities
during our participation in the CWPL Program. The Agreement includes an escrow payment of
$1,500 per homeowner to the City to reimburse the City for its costs during the loan application
and assessment waiver preparation. The HOA signed the Agreement and paid the required
escrow amount within a week of the September meeting, and the City sent in the CWPL
application.
On October 14, the City received word that its application on behalf of Tii Gavo had been
approved and fully funded for $750,000. The City now has 90 days to sign the Loan
Agreement, which expires January 6, 2026. My conversations with the MCPA regarding the
Loan Agreement have resulted in the approved funding amount increasing to $1,175,000. The
HOA’s application consisted of two projects, totaling $1,175,000. They intended to secure
funding for the remaining $425,000 in 2026 through a second loan application, once 70% of the
original project was completed. The MPCA allowed both funding requests to be included in the
original loan application, thus making the assessment waiver cover the full cost of both projects
and eliminating the need for a second assessment waiver for the remaining $425,000 once it was
secured in 2026.
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Since the approval notification, the City Attorney has been working to complete title work for all
37 parcels in Tii Gavo and to develop the assessment waiver form. Each parcel will be assessed
$35,329.15 over nine years. This amount includes the principal and interest of the loan, plus a
$750 fee for the City’s ongoing loan costs during repayment. The assessments will begin in
2026 and end in 2034. The City’s final repayment on the loan is in 2035. The HOA has worked
to get all homeowners to sign the assessment forms before the Council's November meeting.
The assessment waivers need to be filed with the County by December 1, 2025, to be applied to
taxes paid in 2026. We should have all the signed assessment waivers by Tuesday's meeting. If
so, we will present the updated Loan Agreement Resolution 11-18-25-10 for the full $1,175,000
to the Council for approval. Once approved, the City is locked into the loan, which will begin
repayment in 2029 and finish in 2035. The money collected before repayment begins will be
held in an account awaiting disbursement.