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Hibbing council approves application for $9.2M PFA loan to fund water projects
Summary
Hibbing Public Utilities asked the city to apply for a $9.2 million Public Facilities Authority loan covering 2025 and 2026 water projects; council approved the resolution after questions about bond rating and rate-study implications. Officials said the loan offers low interest rates and will repay inter-utility advances.
Hibbing Public Utilities General Manager Mr. Peterson asked the City Council on June 3 to approve a resolution to apply for a $9.2 million loan from the Minnesota Public Facilities Authority to finance water projects completed in 2025 and projects currently underway in 2026.
Mr. Peterson described the total ask as $9.2 million, with roughly $5.1 million allocated to previously completed 2025 projects (including a 17th Street water-main replacement and phase one of 23rd Street) and about $4.1 million for 2026 work. He said the PFA provides very low-interest financing — citing existing PFA loans averaging about 2% interest — and noted the city currently has about $18.9 million outstanding in PFA debt for water projects.
Council members pressed for context on bond-rating impacts and budgetary implications. City Finance staff (Sheena) said the bond-rating firm evaluates the city’s overall financial condition and would account for the additional revenue bonds. Mr. Peterson confirmed the commission had incorporated the proposed debt into the most recent rate study and said the water commission expects to maintain debt-service capacity. "This is the best money available to pay for the water that we have," Peterson said, and he outlined the practical benefit of using PFA financing to repay an inter-utility loan that funded work while the state application was pending.
Councilors approved the application by voice vote after discussion and questions about timing, alternative funding, and the next funding opportunity if this application is not successful. Mr. Peterson said the PFA process can lag for months to years and that the application must proceed to avoid delaying essential repairs and replacements.
The resolution authorizes submission of the PFA loan application; the council did not finalize loan terms in open session, which are subject to subsequent state review and closing procedures.
