Title
Scheduling of a Public Hearing for the GLWA FY 2024 Clean Water State Revolving Fund (CWSRF) Program Project Submittal
Body
Agenda of: February 22, 2023
Item No.: 2023-020
Amount: N/A
TO: The Honorable
Board of Directors
Great Lakes Water Authority
FROM: Suzanne R. Coffey, P.E.
Chief Executive Officer
Great Lakes Water Authority
DATE: February 22, 2023
RE: Scheduling of a Public Hearing for the GLWA FY 2024 Clean Water State Revolving Fund (CWSRF) Program Project Submittal
MOTION
Upon recommendation of Nicolette N. Bateson, Chief Financial Officer/Treasurer, the Board of Directors (Board) of the Great Lakes Water Authority (GLWA), approves the Scheduling of a Public Hearing for the GLWA FY 2024 Clean Water State Revolving Fund (CWSRF) Program Project for April 26, 2023 at 2:00 p.m. 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 (the “GLWA”) has identified one wastewater system project in the FY 2023 to FY 2027 Capital Improvement Plan (CIP) for submittal to the Michigan Department of Environment, Great Lakes and Energy (EGLE) FY 2024 Clean Water State Revolving Fund (CWSRF) low interest financing program. The deadline for submitting a CWSRF project plan to EGLE is May 1, 2023. Prior to submitting the project plan, GLWA must hold a public hearing to present the project plan, which staff is requesting to be scheduled for April 26, 2023, at 2:00 pm.
The project plan and public hearing notice for the Pump Station No. 2 VFD Replacement Project will be posted on the GLWA website <https://www.glwater.org/>. A summary of the project plan will be presented at the public hearing. After the public hearing is closed, a resolution for the projects will be scheduled for action by the GLWA Board of Directors at its regularly scheduled meeting also on April 26, 2023. The resolution must be approved and signed to ensure the finalized project plans are assembled, printed, and submitted to the EGLE by the deadline of May 1, 2023.
The Project:
Pump Station No. 2 VFD Replacement - The Pump Station No. 2 VFD Replacement Project is comprised of significant electrical upgrades, including VFD and transformer replacement, that will maintain the operability of this critical pumping facility at the headworks of the Water Resource Recovery Facility (WRRF). The existing VFD at Pump Station 2 were identified for replacement due to their age, cost of maintenance, and criticality to the operation of the facility. The new VFD will provide the means for the main lift pumps to convey sewage with more reliability and flexibility, allowing the operations staff to modify pumping rates to properly convey flow during dry and wet weather conditions. The total cost of this project this project is currently estimated at $12 million.
JUSTIFICATION
GLWA is seeking low interest loan assistance through the CWSRF program for this project. Although the EGLE interest rate for FY 2024 will not be determined until October 2023, the current year’s interest rates are 1.875% for 20-year and 2.125% for 30-year loans. Potential dollar savings are significant when comparing to municipal bond interest rates in a market-based transaction. By way of example, the ten-year financial plan utilizes an estimated rate of 5.0% for future debt. Comparing to the plan, potential interest savings with a 20-year SRF loan would be $4.8 million and savings on a 30-year loan would be $7.1 million. Another advantage of SRF is that interest costs are only incurred on the amount drawn from the SRF loans as project expenditures are being incurred, resulting in additional debt service savings early in the term of the loan compared to market-based transactions. Also, use of SRF funding as junior lien does not impact GLWA debt reserve requirements.
BUDGET IMPACT
Debt service interest payments on these projects would begin in the fall of FY 2025 and will be included as part of the FY 2025 financial plan.
COMMITTEE REVIEW
This matter was reviewed by the GLWA Audit Committee at its meeting February 13, 2023. The Audit Committee unanimously recommended that the Great Lakes Water Authority Board of Directors schedule a public hearing for the GLWA FY 2024 Clean Water State Revolving Fund (CWSRF) Program project submittal for April 26, 2023 at 2:00 p.m.