Pine City Council approves application for state housing infrastructure grant with condition to allow withdrawal if matching funds cannot be secured

Pine City Council members voted to submit an application for the Greater Minnesota Housing Infrastructure Grant to finance infrastructure for the Fawn Meadows development, approving Resolution 2025-22 with a condition that the city be able to withdraw without penalty if it cannot provide required matching funds.

Council member Palmer moved to approve the resolution "with the condition that there has to be an out clause if the city is unable to provide the matching funding," and the council adopted the motion by roll call. Council members Dave and Kyle voted in the affirmative along with Palmer.

The application deadline was described in the meeting as the following day at 5:00 p.m.; staff member Leslie prepared a draft application that uses cost estimates from a feasibility study completed in late 2024. Council discussion focused on the source and risk of the local matching funds and how assessments would be apportioned to parcels in the Fawn Meadows area.

Council members cited the feasibility studyfigures (about $1.3 million) and said Minnesota Housing may provide up to $500,000, leaving the city and/or property owners responsible for the remainder. Members raised concerns that heavy special assessments against a small number of parcels could lead property owners to let parcels go into foreclosure, leaving the city with unpaid obligations.

Staff read grant guidance during the meeting noting that a budget attached to a grant agreement "may be modified with prior written approval from Minnesota Housing before the expense is incurred by the grantee," which the council discussed as a potential mechanism to avoid immediate financial exposure. Council members also discussed internal fallback options, including liquidating city certificates of deposit or future bonding, but several cautioned against committing funds that could saddle future councils or force significant tax increases.

Throughout the discussion, members asked staff to confirm whether the draft resolution and application could include explicit language preserving the citythe right to decline or withdraw if matching funds are not available. Council Palmer and other members said they would ask staff to seek clarification from Leslie and, if necessary, add the out clause language before submission.

Next steps: staff will communicate with Leslie to confirm whether Minnesota Housing and the application materials allow withdrawing without penalty if the city later cannot secure matching funds, and the council directed that the application include the agreed condition before submission. The meeting adjourned after the vote.