Title
Resolution for Approval of Series Ordinance Authorizing Issuance and Sale of Sewage Disposal System Revenue Bonds in an Aggregate Amount Not to Exceed $63,664,685 (Ordinance 2026-01) for FY 2026 Clean Water State Revolving Fund Projects
Body
Agenda of: March 11, 2026
Item No.: 2026-066
Amount: Not to Exceed $63,664,685
TO: The Honorable
Board of Directors
Great Lakes Water Authority
FROM: Suzanne R. Coffey, P.E.
Chief Executive Officer
Great Lakes Water Authority
DATE: March 11, 2026
RE: Resolution for Approval of Series Ordinance Authorizing Issuance and Sale of Sewage Disposal System Revenue Bonds in an Aggregate Amount Not to Exceed $63,664,685 (Ordinance 2026-01) for FY 2026 Clean Water State Revolving Fund Projects
MOTION
Upon recommendation of Nicolette N. Bateson, Chief Financial Officer (CFO) and Treasurer, the Board of Directors (Board) of the Great Lakes Water Authority (GLWA), approves a resolution for Approval of Series Ordinance Authorizing Issuance and Sale of Sewage Disposal System Revenue Bonds in an Aggregate Amount Not to Exceed $63,664,685 (Ordinance 2026-01) for FY 2026 Clean Water State Revolving Fund Projects as presented, and authorizes the Chief Executive Officer (CEO) to take such other action as may be necessary to accomplish the intent of this vote.
BACKGROUND
Annually, the Great Lakes Water Authority (GLWA) submits projects to the Michigan Department of Environment, Great Lakes, and Energy (EGLE) for low-interest funding consideration through the Clean Water State Revolving Fund (CWSRF). EGLE awarded GLWA funding for the Pump Station No. 2 Variable Frequency Drive (VFD) Replacement project and GLWA’s Combined Sewer Overflow (CSO) Facility Improvement project for EGLE’s FY 2026 funding year.
The Pump Station No. 2 Variable Frequency Drive (VFD) and CSO Facility Improvement projects have an anticipated loan closing date of May 7, 2026, and to issue debt, a Series Ordinance (2026-01) must be adopted by the GLWA Board.
There are two key drivers related to this resolution: CWSRF funding and financing.
CWSRF Funding
Pump Station No. 2 VFD Replacement - (CIP No. 211005, SRF No. 5859-01): On April 26, 2023, the GLWA Board adopted a resolution approving the SFE Pump Station project plan for submittal to EGLE’s FY 2024 CWSRF program following a public hearing on the same date. Although the project did not receive funding in FY 2024 subsequent resubmissions led to project funding in the amount of $20,000,000 as notified on EGLE’s final FY 2026 CWSRF Intended Use Plan (IUP) in October 2025. Further, GLWA recently learned that there may be additional CWSRF funding available of up to $5,000,000 to support this project. This funding allocation is summarized below.
Total IUP Award Amount $20,000,000
Potential Additional Loan Funding 5,000,000
Anticipated CWSRF Loan Amount $25,000,000
Funded from other GLWA sources 16,080,626
Estimated Construction Cost $41,080,626
The current, estimated project construction cost has increased to $41,080,626, which differs from the $12,000,000 presented at the April 26, 2023 Public Hearing and the updated $20,000,000 estimate provided with the FY 2026 resubmission to EGLE. This is due to ongoing cost increases as well as design detail and cost estimate refinements made during the formal bid process. The remaining$16,080,626 not covered through CWSRF funding will be paid through other GLWA resources such as revenue bond proceeds.
CSO Facility Improvements - (CIP No. 270006, SRF No. 6025-01): On April 23, 2025, the GLWA Board adopted a resolution approving the CSO Facilities Improvement project plan for submittal to EGLE’s FY 2026 CWSRF program following a public hearing on the same date. The project was subsequently approved for funding as notified on EGLE’s final CWSRF Intended Use Plan (IUP) in October 2025.
Total CWSRF Loan Amount $12,519,300
Principal Forgiveness 1,870,700
Anticipated CWSRF Loan Amount $14,390,000
The current estimated project cost is $16,796,360. This differs from the $23,578,000 cost estimate presented at the April 23, 2025 public hearing because EGLE determined certain costs related to architectural and safety improvements fell outside the scope of allowable expenses under the CWSRF program.
Financing
The 2026 SRF-2 and SRF-3 Junior Lien Bonds will be sold through the Municipal Finance Authority (MFA) under the state of Michigan’s CWSRF program. The amount to be financed is within GLWA’s authorized bond limits. This bond will be supported by GLWA Board Resolution 2024-359, “Authorizing Publication of Notice of Intent to Issue Sewage Disposal System Revenue Bonds” in the amount of not to exceed $300,000,000 was approved on November 21, 2024, and is the second series of sewer bonds from that Notice of Intent.
The calculation for this Series Ordinance represents a potential loan amount of $63,664,685, which is the revised estimated project cost for qualifying SRF expenses based on current bid information. This amount, as shown on Attachment 1 Table 1, is based upon current estimated project costs plus a 10% contingency. The not-to-exceed (NTE) amount is also based on this revised project cost and includes a 10% loan financing contingency to allow for fluctuations in the final SRF award amount which is an acceptable practice.
The Total Project Cost and NTE calculation is summarized below with additional details in Attachment 1 Table 1.
Estimated SRF Project Cost: $57,876,986
Loan Financing Contingency: 5,787,699
Series Ordinance NTE amount: $63,664,685
JUSTIFICATION
The approval of this series ordinance is the next formal step required by the GLWA Board in the bond issuance process. This proposed action authorizes the bonds to be issued. The SFE Pump Station project has an anticipated MFA Quarter 2.5 loan closing in May 2026 with MFA, and the bond will be supported by this series ordinance. The series ordinance sets forth the guidelines for CWSRF bonds, designates the bonds as 2026 SRF-2 and SRF-3 Junior Lien Bonds, and authorizes the CEO or CFO/Treasurer to execute the final terms of the bonds, paying issuance costs, and signing of the Purchase Contract and Sale Order within the parameters set forth in the Series Ordinance.
In addition to eligibility for CWSRF funds, GLWA was designated as an overburdened applicant that qualifies for a lower interest rate than a standard applicant. The current interest rate on a 20-year and 30-year loan for an overburdened applicant is 2.00%. Potential dollar savings are significant when compared to municipal bond interest rates in a market-based transaction. For example, the combined CWSRF loan amount for these projects is approximately $64 million. Compared to an estimated market-based rate of 4.5%, potential interest savings on a 20-year loan would be approximately $20 million and $32 million for a 30-year loan. See Attachment 2 Table 1 for additional cost savings details.
Another program advantage 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 SRF funding as Junior Lien does not impact GLWA debt reserve requirements.
BUDGET IMPACT
Interest payments are initiated following loan drawdowns and are anticipated to begin in October 2026. Estimates were included in the FY 2027 - FY 2028 biennial budget. Principal payments for debt service typically begin within three years of the loan closing or the close of the project and initiation of operations. This is anticipated to begin in October 2029 and will be included as part of the FY 2029 - FY 2030 biennial budget.
COMMITTEE REVIEW
This matter was reviewed by the GLWA Audit Committee at its meeting on February 27, 2026. The Audit Committee unanimously recommends the Board of Directors approve a resolution for Approval of Series Ordinance Authorizing Issuance and Sale of Sewage Disposal System Revenue Bonds in an Aggregate Amount Not to Exceed $63,664,685 (Ordinance 2026-01) for FY 2026 Clean Water State Revolving Fund Projects as presented and authorizes the Chief Executive Officer (CEO) to take such other action as may be necessary to accomplish the intent of this vote.
SHARED SERVICES IMPACT
This item does not impact the shared services agreement between GLWA and DWSD beyond the terms outlined above as well as reimbursement of financing costs incurred.