Credit Enhancement Program
The Credit Enhancement Program helps cities and counties reduce the costs of borrowing to build certain public facilities.
Note: The PFA strongly encourages cities to first determine if financing for their project may be available through the Clean Water or Drinking Water Revolving Funds before proceeding under the Credit Enhancement Program with their own market rate bonds. If available, PFA loans through the revolving fund programs offer below-market interest rates that will provide significant interest savings.
Overview
Administered by the Minnesota Public Facilities Authority (PFA), the program provides limited state bond guarantees, which result in higher credit ratings for counties and lower interest rates on general obligation bonds.
Cities and counties apply to the PFA for a specific bond issue and enter into an agreement to comply with the requirements of state law.
If counties are unable to make a payment on the bonds covered under the program, the state will make the payment, provided that funds are available in the state general fund.
If the state pays part or all of a bond payment, the county's full-faith-and-credit pledge on the bonds automatically becomes a full-faith-and-credit pledge to repay the state, with interest.
