Title
Resolution to Adopt the Fiscal Year (FY) 2026 Clean Water State Revolving Fund (CWSRF) Project Plan for the Detroit Water and Sewerage Department (DWSD) Sewer Main System Rehabilitation in the neighborhoods of Hubbard Farms and North Corktown
Body
Agenda of: April 23, 2025
Item No.: 2025-104
TO: The Honorable
Board of Directors
Great Lakes Water Authority
FROM: Suzanne R. Coffey, P.E.
Chief Executive Officer
Great Lakes Water Authority
DATE: April 23, 2025
RE: Resolution to Adopt the Fiscal Year (FY) 2026 Clean Water State Revolving Fund (CWSRF) Project Plan for the Detroit Water and Sewerage Department (DWSD) Sewer Main System Rehabilitation in the neighborhoods of Hubbard Farms and North Corktown
MOTION
Upon recommendation of Nicolette Bateson, Chief Financial Officer/Treasurer, the Board of Directors (Board) of the Great Lakes Water Authority (GLWA) approves the attached Resolution for the FY 2026 Clean Water State Revolving Fund (CWSRF) Project Plan for the Detroit Water and Sewerage Department (DWSD) Sewer Main System Rehabilitation in the neighborhoods of Hubbard Farms and North Corktown; and authorizes the CEO to take such other action as may be necessary to accomplish the intent of this vote.
BACKGROUND
The Great Lakes Water Authority secures capital improvement financing on behalf of Detroit Water and Sewerage Department in accordance with foundational documents related to the establishment of GLWA. DWSD has identified the Sewer Main Rehabilitation project in the neighborhoods of Hubbard Farms and North Corktown within the city of Detroit for submittal to the Michigan Department of Environment, Great Lakes, and Energy (EGLE) for FY 2026 CWSRF funding consideration. This project includes the replacement of sewer mains, cured-in-place pipe (CIPP) rehabilitation, spot repairs, manhole lining, and manhole replacement. All work is to be performed within the existing road right-of-way and easements. The impact of the project will be improved customer satisfaction, safe, and reliable collection of wastewater from customers. The project will reduce the frequency of basement backups and cave-ins caused by sewer mains. The estimated cost of this project is $20 million.
The deadline for submitting all CWSRF project planning documents to EGLE is May 1, 2025, but prior to submitting the project plans, a public hearing must be held for the affected area. The public hearing notice and project plan were posted on the DWSD website and can be viewed at: www.detroitmi.gov/dwsd <http://www.detroitmi.gov/dwsd>. This project plan was presented at that DWSD Public Hearing on February 19, 2025.
JUSTIFICATION
Pursuant to Section 7.2(b) of the Regional Sewage Disposal System Lease between the City of Detroit and GLWA, the Authority shall cooperate fully with the City in the implementation of this Detroit capital improvement, including financing through the Authority. Therefore, GLWA will submit the local project plan as it will be the CWSRF loan applicant. Per notification from EGLE, GLWA does not need to hold a separate public hearing on the local project, however, the GLWA Board of Directors will need to act on the included resolution adopting the project plan. The resolution must be approved and signed to ensure the final project plans, forms, and attachments are assembled and submitted to the EGLE by the May 1, 2025 deadline.
GLWA concurs with the DWSD Sewer Main Rehabilitation in the neighborhoods of Hubbard Farms and North Corktown in the city of Detroit Project Plan adoption, and as the CWSRF applicant, is seeking low interest loan assistance from the CWSRF program. Savings are typically significant when comparing the interest rates under the CWSRF program with a similar open market revenue bond issue. Although the EGLE interest rate for FY 2026 will not be published until approximately October 2025, the current 20-year and 30-year loan interest rate for a significantly overburdened applicant under the CWSRF program, which has been applicable for DWSD projects, is 1.00 percent. Compared to an estimated market-based rate of 4.5%, potential interest savings on a 20-year loan would be approximately $8.6 million for a CWSRF loan amount of $20 million.
Another advantage of the CWSRF is that interest costs are only incurred on the amount drawn from the loan as project expenditures are incurred. This results in additional debt service savings early in the term of the loan compared to market-based transactions. Further, use of CWSRF funding as junior lien does not impact GLWA debt reserve requirements.
BUDGET IMPACT
GLWA will be the loan applicant on CWSRF loans issued on behalf of the DWSD, and DWSD will be the CWSRF loan recipient as determined by EGLE. All project costs financed by GLWA, on behalf of DWSD, through the CWSRF program bonds and resulting principal and interest payments on the bonds will be directly allocable to the DWSD local system. Debt service is anticipated to begin on October 1, 2026 for this project and will be included as part of the FY 2027 - FY 2028 biennial budget.
COMMITTEE REVIEW
This matter was presented to the GLWA Audit Committee at its March 28, 2025 meeting. The Audit Committee unanimously recommended that the Great Lakes Water Authority Board of Directors approve the attached Resolution for the FY 2026 Clean Water State Revolving Fund (CWSRF) Project Plan for the Detroit Water and Sewerage Department (DWSD) Sewer Main System Rehabilitation in the neighborhoods of Hubbard Farms and North Corktown as presented.
SHARED SERVICES IMPACT
This item does not impact the shared services agreement between GLWA and DWSD.