Item 3.10 Authorizing a Drinking Water Revolving Fund Loan Application
Request for
City Council Action
DEPARTMENT INFORMATION
ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE:
Administration City Administrator/Finance Director Flaherty March 23, 2026
PRESENTER(s) REVIEWED BY: ITEM #:
Consent 3.10 – PFA Application
STRATEGIC VISION
MEETS: THE CITY OF OTSEGO:
Is a strong organization that is committed to leading the community through innovative communication.
X Has proactively expanded infrastructure to responsibly provide core services.
X Is committed to delivery of quality emergency service responsive to community needs and expectations in a
cost-effective manner.
Is a social community with diverse housing, service options, and employment opportunities.
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff recommend that the City Council adopt a resolution.
ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED?
No No
BACKGROUND/JUSTIFICATION:
The City is progressing with the Water Treatment Improvements at Wellhouse 3 project, which was a key component
of the Drinking Water Master Plan (the Plan) supporting long term goals and implementation phasing to deliver
improved drinking water and to meet growth expectations.
City staff submitted the project to the Minnesota Department of Health (MDH) for inclusion on the Project Priority List
(PPL). The City’s project scored well enough on the PPL, that City staff also then requested placement of the project
on the Intended Use Plan (IUP) with the Minnesota Public Facilities Authority (MPFA).
The City has also secured Congressionally Directed Spending (CDS) grant funding in the amount of $1.4 million,
together with the PFA loan and state emerging contaminant grants, will provide the financing mechanisms for the
project. City staff is working through approvals with the Environmental Protection Agency which is the federal agency
administering the grant funds, and a request for authorization to bid the project in March 2026.
Pending approval of the resolution within the packet, City staff will assemble the necessary documents and
application forms for submittal to PFA to begin their loan review process. The City Council would not be authorizing
issuance of the loan until after the project has been bid, a contract awarded, final PFA approvals, and EPA approvals.
City staff has drafted the attached resolution, upon adoption by the City Council, would authorize City staff to submit
the loan application.
SUPPORTING DOCUMENTS ATTACHED:
• Resolution 2026-24
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES:
Motion to adopt Resolution 2026-24 authorizing a Drinking Water Revolving Fund loan application to the Minnesota
Public Facilities Authority.
BUDGET INFORMATION
FUNDING: BUDGETED:
Fund 601 – Water Utility
Yes
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CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO: 2026-24
DRINKING WATER REVOLVING FUND LOAN APPLICATION
TO THE
MINNESOTA PUBLIC FACILITIES AUTHORITY
WHEREAS, The City is progressing with the Water Treatment Improvements at Wellhouse 3 project, which was a key
component of the Drinking Water Master Plan (the Plan) supporting long term goals and implementation phasing to deliver
improved drinking water and to meet growth expectations; and
WHEREAS, the design phase for the Water Treatment Improvements at Wellhouse 3 project has been completed; and
WHEREAS, the City of Otsego intends to move forward with the construction phase in 2026; and
WHEREAS, the City of Otsego will be submitting a complete application package to the Minnesota Public Facilities Authority.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA:
1. That the City of Otsego is hereby applying to the Minnesota Public Facilities Authority for a loan from the Drinking
Water Revolving Fund for improvements to its municipal drinking water system as described in the loan application.
2. That the City of Otsego estimates the loan amount to be $17,326,150, or the as-bid cost of the project.
3. That the City of Otsego has the legal authority to apply for the loan, and the financial, technical, and managerial
capacity to repay the loan and ensure proper construction, operation, and maintenance of the project for its design
life.
4. That the City of Otsego hereby expresses its official intent to use the proceeds of this loan to reimburse certain
expenditures made prior to the issuance of its general obligation revenue note to the Public Facilities Authority.
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ADOPTED by the Otsego City Council this 23rd day of March, 2026.
MOTION BY:
SECONDED BY:
IN FAVOR:
OPPOSED:
CITY OF OTSEGO
__________________________________
Jessica L. Stockamp, Mayor
ATTEST:
__________________________________
Audra Etzel, City Clerk