Loading...
08.b Resolution No. 12-16-25-09 – MPCA Clean Water Loan Promissory NoteDANIEL F.BURNS dburns@fryberger.com 218.725.6892 December 12, 2025 Kyle H. Morell City Administrator City of Scandia, Minnesota 14727 209th Street North Scandia, MN 55073 Re: General Obligation Note Issuance and MPCA Loan Dear Mr. Morell: This letter is provided to follow-up on discussions we have had regarding the Tii Gavo Septic System Modification Project (the to be financed through the Minnesota Clean Water PartnershipProgram (the . The Program is authorized by Minnesota Statutes, Sections 103F.701 to 103F.755, known as the Clean Water Partnership Law (the , and is administered by the Minnesota Pollution Control Agency (the . To finance projects under the Program, such as the Project, the MPCA provides loans to a local government entity (the , referred to as the (in this case, the City of Scandia). The Sponsor then turns around and loans the funds to the end borrower who owns and manages the project (the -Loan ). This end borrower is referred to as an Participant under the Program. The Eligible Participant is obligated to repay the Sponsor principal and interest payments on the Sub-Loan sufficient in amount for the Sponsor to pay principal and interest payments when due on the MPCA Loan. The MPCA Loan between the MPCA and the Sponsor is governed by the Act and a Minnesota CWP Loan Agreement (the . As required under Section 103F.725 of the Act and the Agreement, the Sponsor must issue a general obligation promissory note to evidence and secure the MPCA Loan (the . The GO Note must be issued in accordance with the Act and FRYBERGER, BUCHANAN, SMITH & FREDERICK, P.A - DULUTH 302 West Superior St, Ste 700 Duluth, MN 55802 p: (218) 722-0861 SUPERIOR 1409 Hammond Ave., Suite 330 Superior, WI 54880 p: (715)392-7405 fryberger.com CLOQUET 813 Cloquet Ave. Cloquet, MN 55720 p: (218) 879-3363 FRYBERGER, BUCHANAN,SMITH & FREDERICK, P.A. December 12, 2025 Page 2 Minnesota Statutes, Chapter 475, which is the act that governs municipal bond issuances (the . The GO Note is a which is the definition of an the Bond Law. As such, while the structure of this financing is different than a typical general obligation bond issuance, where the city borrows money for its own project and levies taxes to repay the bond, the City is still required to go through the process of issuing a bond pursuant to Minnesota law under this Program. However, due to the Sponsor acting as a pass-through for the financing of the project, the Act does state that no election is required to authorize the issuance of the GO Note, and the GO Note shall not constitute an indebtedness of the Sponsor within the meaning of any constitutional or statutory provisions or limitations. Please feel free to contact me if you have any further questions or comments. Sincerely, Daniel F. Burns 1 RESOLUTION NO. 12-16-25-09 RESOLUTION APPPROVING AND AUTHORIZING THE EXECUTION OF A MINNESOTA CLEAN WATER PARTNERSHIP LOAN AGREEMENT, THE ISSUANCE OF A GENERAL OBLIGATION PROMISSORY NOTE, AND OTHER ACTIONS RELATED THERETO BE IT RESOLVED, by the City Council of the City of Scandia, Washington County, Minnesota (the “Sponsor”), as follows: Section 1. Authorization and Findings. 1.01. The Sponsor, a political subdivision of the State of Minnesota is authorized and empowered by the provisions of Minnesota Statutes, Chapter 475 and Sections 103F.701 to 103F.755, as amended (collectively, the “Act”), to borrow money from the Minnesota Pollution Control Agency (the “MPCA”) for the purpose of funding a revolving loan program under the Minnesota Clean Water Partnership, as provided in the Act. The Sponsor proposes to enter into a financing agreement (the “MPCA Agreement”) with the MPCA pursuant to which the Sponsor shall borrow money from the MPCA (the “MPCA Loan”) from time to time and lend the proceeds thereof to persons entitled to receive such loans (the “Loans”) under the MPCA Agreement (“Eligible Participants”), or may agree that loans to the Eligible Participants will be made by local lending institutions (“Eligible Lenders”), such loans to be documented by loan agreements between the Sponsor and each Eligible Participant or Eligible Lender (the “Project Loan Agreements”), in furtherance of the “Project Work Plan” as provided in the MPCA Agreement. The Sponsor may at any time determine to make project loans directly to Eligible Participants, rather than through Eligible Lenders, and in such case the references herein to Eligible Lenders and Project Loan Agreements shall be deemed to refer to Eligible Participants and the loan agreements between the Sponsor and the Eligible Participant. 1.02. The Sponsor is authorized to borrow money and issue its general obligation promissory note (the “Note”) to the MPCA under the Act, in evidence of the MPCA Loan. Under the Act, no election is required to authorize the issuance of the Note, and the Note shall not constitute an indebtedness of the Sponsor within the meaning of any constitutional or statutory provisions or limitations. The Mayor and City Administrator are hereby authorized to approve the final terms of the Note, and their execution and delivery of the Note shall evidence such approval. The terms of the Note, as so executed and delivered, shall be deemed to be incorporated herein by reference. 1.03. The Sponsor intends to make loans in amounts which will require the Sponsor to issue the Note in an aggregate principal amount not exceeding $1,175,000. 1.04. The execution and delivery of the MPCA Agreement, in the form of which is attached hereto as Exhibit A, is, in all respects, hereby authorized, approved and confirmed, and the Mayor and City Administrator are hereby authorized and directed to execute and deliver the MPCA Agreement substantially in the form and content attached hereto as Exhibit A, with such changes as the Mayor and City Administrator, in consultation with the Sponsor’s Attorney, deem 2 appropriate and approve, for and on behalf of the Sponsor. The Mayor and City Administrator are hereby further authorized and directed to implement and perform the covenants and obligations of the Sponsor as set forth in or required by the MPCA Agreement. 1.05. The execution and delivery of the Project Loan Agreements and the pledging of the loan payments thereunder for the security of the Note and the interest thereon shall be, and they are, in all respects, hereby authorized, approved and confirmed, and the Mayor and City Administrator are hereby authorized and directed to execute and deliver, from time to time, the Project Loan Agreements, with such changes as the Mayor and City Administrator, in consultation with the Sponsor’s Attorney, deem appropriate and approve, for and on behalf of the Sponsor. The Mayor and City Administrator are hereby authorized to approve the final terms of each Project Loan Agreement, and their execution and delivery of such Project Loan Agreement shall evidence such approval. Notwithstanding the foregoing, the Sponsor intends to levy and collect assessments from the property owners benefitting from the Tii Gavo Septic System Modification project, and use such assessments to make repayments on the Note when due and payable. 1.06. Capitalized terms used but not defined herein shall have the meanings given thereto in the MPCA Agreement. Section 2. The Note. 2.01. The Sponsor has determined that it is necessary and expedient that the Sponsor issue a Note to be designated “Taxable General Obligation Promissory Note (MPCA – Tii Gavo Septic System Modification Project), Series 2026A” to provide moneys to lend to Eligible Participants or Eligible Lenders through the Project Loan Agreements from time to time as the Sponsor shall determine. Pursuant to the Project Loan Agreements, Eligible Participants are required to use the proceeds of the Loan for costs of projects permitted under the MPCA Agreement, and the Eligible Lenders are obligated to use the proceeds of the Second-Tier Loans to make loans to Eligible Participants, as defined in the Project Loan Agreements. The Note shall be substantially in the form attached hereto as Exhibit B; the aggregate principal amount of the Note shall not exceed $1,175,000. The principal balance of the Note from time to time shall be an amount equal to the aggregate of all MPCA Loan advances theretofore made under the MPCA Agreement, less the amount of any principal repayments or redemptions theretofore made. If the full amount of the MPCA Loan has not been advanced under the MPCA Agreement within three years of the effective date of the MPCA Agreement, or such other date as may be agreed to by the MPCA and the Sponsor, whether provided for in a new or amended MPCA Agreement or otherwise, the MPCA shall, under the provisions of the MPCA Agreement, reduce the principal amount of the MPCA Loan to an amount equal to the total loan amount then and theretofore advanced, and shall prepare and provide to the Sponsor revised repayment schedules for the MPCA Loan. Upon such action by the MPCA, the aggregate principal amount of the Note shall be limited to the principal amount of the corresponding MPCA Loan, and the revised repayment schedules shall be deemed to have replaced and superseded the payment schedule of the Note as set forth in the Note. 2.02. (a) The Note shall bear a date of original issue as of the date of its execution and delivery to the MPCA. 3 (b) The Note shall bear interest from its date of original issue at an interest rate of 1.5% per annum, unless any payment provided for in paragraph (c) below is not paid when due, in which case the principal balance of the Note shall bear interest at the rate of 4% per annum, commencing on the day following the date on which such payment was due and continuing until the date on which payment in full thereof is actually received by the MPCA. (c) The principal balance of the Note, plus the interest which has accrued on the Note at an interest rate of 1.5% per annum shall be payable in semiannual installments of $91,387.75 each, payable on June 15 and December 15 in each year, commencing June 15, 2029 through and including December 15, 2035 (the “'Note Payment Dates”), all subject to revision as provided in the MPCA Agreement and any replacement thereof or amendment thereto between the Sponsor and the MPCA. 2.03. The principal balance of the Note is subject to redemption and prior payment at the option of the Sponsor on any date, upon not less than thirty (30) days written notice to the MPCA, in whole or in part in such amounts as the Sponsor may determine at a redemption price equal to the principal amount being redeemed, together with any accrued interest to the redemption date. If less than all of the principal balance is to be redeemed and prepaid, the Sponsor may elect, in the notice of redemption, to reduce the amount of or eliminate specified semiannual payments; if the Sponsor does not specify otherwise, any partial prepayment will be applied to reduce the amount of the semiannual payments in inverse order of their due dates. Partial redemptions and prepayments shall be made in increments of $1,000 principal amounts and in minimum amounts of $1,000. Section 3. Granting Clauses. The Sponsor, in order to secure the payment of the principal of and interest (if any) on the Note and the performance and observance of each and all of the covenants and conditions herein and therein contained, and for and in consideration of the premises and of the purchase and acceptance of the Note by the MPCA, and for other good and valuable considerations, the receipt of which is hereby acknowledged, by these presents does hereby grant, bargain, sell, assign, transfer, convey, warrant, pledge and set over, unto the MPCA and to its successors a lien on, security interest in and pledge of the interests of the Sponsor in all Project Loan Agreements hereafter entered into between the Sponsor and Eligible Participants or Eligible Lenders in connection with Loans authorized hereby, and all payments of principal, premium (if any) and interest thereon, and all proceeds thereof. If the Sponsor shall well and truly pay or cause to be paid the principal of the Note and the interest due thereon or to become due thereon, at the times and in the manner mentioned in this Resolution and the Note, or shall provide for the payment thereof by depositing with the MPCA sums sufficient to pay the entire amount due or to become due thereon, and shall well and truly keep, perform and observe all covenants and conditions pursuant to the terms of the MPCA Agreement and this Resolution, to be kept, performed and observed by it and shall pay to the MPCA all sums of money due or to become due to it in accordance with the terms and provisions hereof; then upon such final payment the lien, security interest and other rights hereby granted shall cease, determine and be void. 4 Section 4. Application of Note Proceeds and Other Moneys; Loan Fund; and Loans. 4.01. The proceeds of the Note shall be equal to, and deemed to be received by, the Sponsor at the same time as the advances of the corresponding MPCA Loan under the corresponding MPCA Agreement. Such proceeds shall be deposited, as received, in the “MPCA Loan Fund”, which is hereby established as a separate bookkeeping account on the books of the Sponsor. Once each month, the Sponsor will determine the amount necessary to fund Loans to Eligible Participants or Eligible Lenders based on Project Loan Agreements entered into subsequent to the last request by the Sponsor for an MPCA Loan advance under the MPCA Agreement, and shall submit a request, in accordance with the MPCA Agreement, for an MPCA Loan advance in the amount necessary to fund such Loans. 4.02. Amounts on deposit in the MPCA Loan Fund shall be used to make Loans to Eligible Participants or Eligible Lenders in accordance with Project Loan Agreements, or to pay the principal and interest on the Note. No amounts in the MPCA Loan Fund which are required to be disbursed to an Eligible Participant or Eligible Lender under a Project Loan Agreement may be used to pay principal or interest on the Note. Each Loan shall be made in accordance with the terms of a Project Loan Agreement and the MPCA Agreement. The interest rate and repayment terms of the Loans shall be determined by the Sponsor in accordance with the MPCA Agreement and applicable rules of the MPCA. The proceeds of each Loan must be expended for eligible costs under the Program (including any applicable federal law) and the MPCA Agreement. Amounts on deposit in the MPCA Loan Fund shall be disbursed by the Sponsor pursuant to the Project Loan Agreement upon request from the Eligible Participate or Eligible Lender. The Sponsor shall have no obligation to see to the proper application of the proceeds of the Loans. Section 5. Certification of Proceedings. 5.01. The City Administrator is hereby authorized and directed to file a certified copy of this resolution in the records of the Sponsor, together with such additional information as required, and to file a certified copy of this resolution with the County Auditor of each County in which the Sponsor is located and obtain from each County Auditor a certificate that the Note has been duly entered upon the County Auditor’s bond register. 5.02. The officers of the Sponsor are hereby authorized and directed to prepare and furnish to the MPCA and Bond Counsel, certified copies of all proceedings and records of the Sponsor relating to the Note and to the financial condition and affairs of the Sponsor, and such other affidavits, certificates and information as may be required to show the facts relating to the legality and marketability of the Note as they appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed representations of the Sponsor to the facts recited herein. 5 EXHIBIT A MPCA AGREEMENT 6 7 8 9 10 11 12 EXHIBIT B FORM OF NOTE UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF WASHINGTON CITY OF SCANDIA TAXABLE GENERAL OBLIGATION PROMISSORY NOTE (MPCA – TII GAVO SEPTIC SYSTEM MODIFICATION PROJECT), SERIES 2026A No. R-1 $1,175,000 Original Issue Date: January ___, 2026 Maturity Date: December 15, 2035 Annual Interest Rate: 1.5% REGISTERED OWNER: MINNESOTA POLLUTION CONTROL AGENCY PRINCIPAL AMOUNT: ONE MILLION ONE HUNDRED SEVENTY FIVE THOUSAND DOLLARS FOR VALUE RECEIVED, the City of Scandia, Washington County, Minnesota (the “Sponsor”), promises to pay to the order of the Minnesota Pollution Control Agency (the “MPCA”), or its successors and assigns, the principal sum equal to the sum of the amounts entered on Schedule A hereto under “Total Amount Advanced,” with interest on each such amount from the date such amount is advanced hereunder at the rate of 1.5% per annum on the unpaid principal balance until paid, unless any Note Payment provided for in Schedule B hereto is not paid when due, in which case the principal balance of this Note shall bear interest at the rate of 4% per annum calculated on the basis of a 360-day year made up of 12 months of 30 days each, commencing on the day following the date on which such Note Payment was due and continuing until the date on which payment in full thereof is actually received by the MPCA. The principal balance of the Note and interest thereon at the rate of 1.5% per annum shall be payable in semiannual installments of $91,387.75 each, payable on June 15 and December 15 in each year, commencing June 15, 2029, and ending on the Maturity Date shown above (the “Note Payment Dates”), all subject to revision as required by that certain Project Implementation Loan Agreement No. SRF0374 (the “MPCA Agreement”), and any replacement thereof or amendment thereto between the Sponsor and the MPCA. Interest, if any, which has accrued on the Note at a rate in excess of 1.5% per annum shall be payable on each Note Payment Date in addition to the regularly scheduled payment of principal and interest on the Note. Each installment shall be in the amount set forth opposite its due date in Schedule B hereto under “Total Note Payment.” Upon each disbursement of Loan amounts to the Sponsor pursuant to the MPCA Agreement, the MPCA shall enter (or cause to he entered) the amount advanced on Schedule A under “Advances” and the total amount advanced under the MPCA Agreement, including such disbursement, under “Total Amount Advanced.” The principal 13 balance of this Note from time to time shall be equal to the Total Amount Advanced, less the total of all Note Payments then and theretofore made by the Sponsor, and less the amount of any redemptions of principal then or theretofore made as provided below. The MPCA shall prepare Schedule B and revised Schedules B, or cause Schedule B and revised Schedules B to be prepared, as provided in the MPCA Agreement. The maximum principal amount of the Note is $1,175,000. All payments under this Note shall be payable at MPCA, 520 Lafayette Road, in St. Paul, Minnesota, or such other place as the MPCA may designate in writing. This Note is issued pursuant to a resolution adopted by the City Council of the Sponsor on December 16, 2025 (the “Resolution”), by authority of and in strict conformity with the Constitution and laws of the State of Minnesota thereunto enabling, including Minnesota Statutes, Chapter 475 and Sections 103F.701 to 103F.755, as amended, and pursuant to the MPCA Agreement, the terms and provisions of which are incorporated herein by reference. The principal balance of this Note is subject to redemption and prior payment at the option of the Sponsor on any date, upon not less than 30 days written notice to the MPCA, in whole or in part in such amounts as the Sponsor may determine at a redemption price equal to the principal amount being redeemed, together with any accrued interest to the redemption date. If less than all of the principal balance is to be redeemed and prepaid, the Sponsor may elect, in the notice of redemption, to reduce the amount of or eliminate specified semiannual payments; if the Sponsor does not specify otherwise, any partial prepayment will be applied to reduce the amount of the semiannual payments in inverse order of their due dates. Partial redemptions and prepayments shall be made in increments of $1,000 principal amounts and in minimum amounts of $1,000, and the MPCA shall revise Schedule B to reflect such partial redemptions and prepayments. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed preliminary to and in the issuance of this Note in order to make it a valid and binding general obligation of the Sponsor in accordance with its terms, have been done, do exist, have happened and have been performed as so required; that, prior to the issuance hereof the Sponsor has, in and by the Resolution and the MPCA Agreement, covenanted and agreed that it will enter into Project Loan Agreements, by which the proceeds of this Note will be lent to Eligible Participants or to Eligible Lenders to be reloaned to Eligible Participants for the purposes set forth in the MPCA Agreement; the repayments of principal and interest on the Loans are anticipated to be received at the times and in the amounts required to produce amounts adequate to pay all principal and interest, if any, when due on the Note, but this Note is a general obligation of the Sponsor and the full faith, credit and taxing powers of the Sponsor have been pledged to the payment of principal and interest when due, and ad valorem taxes, if necessary for such purpose, will be levied upon all taxable property in the Sponsor, without limitation as to rate or amount; that all proceedings relative to the improvements financed by this Note have been or will be taken according to law; that the issuance of this Note, together with all other indebtedness of the Sponsor outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the Sponsor to exceed any constitutional or statutory limitation of indebtedness. 14 In the event of default in the payment of this Note and if the same is collected by an attorney at law, the Sponsor agrees to pay all costs of collection, including a reasonable attorney’s fee. The Sponsor hereby waives presentment for payment, demand, protest, notice of protest and notice of dishonor. This Note and all instruments securing the same are to be construed according to the laws of the State of Minnesota. Signed this ____ day of ___________________, 2026. CITY OF SCANDIA, MINNESOTA By _____________________________ Mayor ATTEST: ______________________________ City Administrator ______________________________________________________________________________ SCHEDULE A SCHEDULE OF AMOUNTS ADVANCED Date Advances Total Amount Advanced Notation Made By 15 SCHEDULE B Date Principal* Interest Total Loan Payment Amount Due 6/15/2029 $ 82,310.87 $ 9,076.88 $ 91,387.75 12/15/2029 $ 82,928.20 $ 8,459.54 $ 91,387.75 6/15/2030 $ 83,550.17 $ 7,837.58 $ 91,387.75 12/15/2030 $ 84,176.79 $ 7,210.96 $ 91,387.75 6/15/2031 $ 84,808.12 $ 6,579.63 $ 91,387.75 12/15/2031 $ 85,444.18 $ 5,943.57 $ 91,387.75 6/15/2032 $ 86,085.01 $ 5,302.74 $ 91,387.75 12/15/2032 $ 86,730.65 $ 4,657.10 $ 91,387.75 6/15/2033 $ 87,381.13 $ 4,006.62 $ 91,387.75 12/15/2033 $ 88,036.49 $ 3,351.26 $ 91,387.75 6/15/2034 $ 88,696.76 $ 2,690.99 $ 91,387.75 12/15/2034 $ 89,361.99 $ 2,025.76 $ 91,387.75 6/15/2035 $ 90,032.20 $ 1,355.55 $ 91,387.75 12/15/2035 $ 90,707.44 $ 680.31 $ 91,387.75 Totals $ 1,210,250.00 $ 69,178.48 $ 1,279,428.48 *Principal includes estimated $35,250.00 accrued interest during project implementation period. 16 Adopted: December 16, 2025 ____________________________________ Mayor ATTEST: ____________________________________ City Administrator 17 EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL OF THE CITY OF SCANDIA, MINNESOTA HELD: DECEMBER 16, 2025 Pursuant to due call and notice thereof, a meeting of the City Council of the City of Scandia, Washington County, Minnesota, was duly held at the City Hall on December 16, 2025, at 7:00 P.M. The following members were present: and the following were absent: Member ____________________ introduced the following resolution and moved its adoption: RESOLUTION APPPROVING AND AUTHORIZING THE EXECUTION OF A MINNESOTA CLEAN WATER PARTNERSHIP LOAN AGREEMENT, THE ISSUANCE OF A GENERAL OBLIGATION PROMISSORY NOTE, AND OTHER ACTIONS RELATED THERETO The motion for the adoption of the foregoing resolution was duly seconded by member ____________ and upon a vote being taken thereon, the following voted in favor thereof: and the following voted against the same: Whereupon the resolution was declared duly passed and adopted.