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Hibbing utility commission approves resolution to issue PFA net-revenue note listing utility as issuer
Summary
The Hibbing Public Utilities Commission approved Resolution 25-08 to issue a Public Facilities Authority (PFA) utility net revenue note series 2025A, with Hibbing Public Utilities as the issuer rather than the City of Hibbing; staff said the change limits the city's general obligation backing and preserves city bonding capacity.
Hibbing Public Utilities Commission on Sept. 23 approved Resolution 25-08 to provide for issuance, sale and delivery of a utility net revenue note, Series 2025A, listing Hibbing Public Utilities (HPU) as the issuer.
The change was presented to the commission as a switch from listing the City of Hibbing as issuer to listing HPU. Luke Peterson, staff member, said the modification reduces how much of the city's general obligation pledge would be required: "we requested to be an issuer as HPU, not through the City Of Hibbing. And what that means for, the residents, the repairs, and taxpayers is that the, PFA requires, basically the City's bond rating to back that." He added that HPU will retain a small piece of city backing limited to an annual debt service reserve account and that the change will save bonding capacity for the City of Hibbing.
Peterson said the application was to the Public Facilities Authority, the state of Minnesota's water bank for public entities, and that HPU's approach is similar to the City of St. Paul, which has a separate public utilities commission. The commission voted to approve the resolution following a motion by Commissioner Stokes, second by Commissioner Hart; the motion carried.
The item was presented as a financing change intended to take advantage of low-cost PFA notes while limiting the extent to which the city's general obligation pledge must cover the full face value of the note. No dollar amount for the note was provided in the discussion recorded in the meeting minutes shown to the commission.
Commissioners asked no follow-up questions during the recorded discussion. Staff did not present a revised repayment schedule or examples of how reduced city backing would change future bonding metrics during the meeting; Peterson said the change "will save additional bonding capacity to the City of Hibbing, and, allow HPU the recognition of its uniqueness."
