Title
Resolution Regarding Approval of Series Ordinance Authorizing Issuance and Sale of Sewage Disposal System Revenue Bonds in an Aggregate Amount Not to Exceed $12,963,500 (Ordinance 2026-05) for FY 2026 Clean Water State Revolving Fund Projects
Body
Agenda of: May 28, 2026
Item No.: 2026-188
Amount: Not to Exceed $12,963,500
TO: The Honorable
Board of Directors
Great Lakes Water Authority
FROM: Suzanne R. Coffey, P.E.
Chief Executive Officer
Great Lakes Water Authority
DATE: May 28, 2026
RE: Resolution Regarding Approval of Series Ordinance Authorizing Issuance and Sale of Sewage Disposal System Revenue Bonds in an Aggregate Amount Not to Exceed $12,963,500 (Ordinance 2026-05) 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), approve a resolution for the Series Ordinance Authorizing Issuance and Sale of Sewage Disposal System Revenue Bonds in an Aggregate Amount Not to Exceed $12,963,500 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
The Detroit Water and Sewerage Department (DWSD) submits projects annually to the Michigan Department of Environment, Great Lakes, and Energy (EGLE) for low-interest funding consideration through the Clean Water State Revolving Fund (CWSRF). On April 23, 2025, the DWSD Board of Water Commissioners adopted a resolution approving the Sewer Rehabilitation in the Neighborhoods of Hubbard Farms and North Corktown (Sewer Rehabilitation) project plan following a public hearing on the same date. The project was awarded funding for EGLE’s FY 2026 funding year with an anticipated loan closing date in August 2026. To issue debt, a resolution adopting the Series Ordinance (2026-05) is required by the GLWA Board.
There are two considerations related to this resolution: the project awarded funding and the subsequent financing. The award process is administered by EGLE, while financing is facilitated through the Michigan Finance Authority (MFA).
CWSRF Project and Award
In October 2025, EGLE confirmed funding for the DWSD Sewer Rehabilitation project on the FY 2026 Intended Use Plan (IUP). The award amount is based on estimated project cost submitted to EGLE in the final project plan. The project description, current estimated project costs, funding allocation, and total award are summarized below.
DWSD Sewer Rehabilitation in the Neighborhoods of Hubbard Farms and North Corktown - (Series 2026-SRF-6; SRF No. 6026-01): This project includes rehabilitation of aging and/or compromised selected sewer mains located in the neighborhoods of Hubbard Farms and North Corktown located in Council District 6. Construction will include the replacement of sewer mains, cured-in-place pipe (CIPP) rehabilitation, spot repairs, manhole lining, and manhole replacement.
This project was originally awarded $23.9 million but was reduced by $12.2 million for ineligible SRF costs. The revised eligible estimated project cost is $11.8 million, and the anticipated funding allocation is shown below. See Attachment 1, Table 1 for additional details.
Original CWSRF Loan Amount: $19,634,900
Original Principal Forgiveness Awarded: 4,310,100
Original IUP Award Amount: $23,945,000
Adjustment for Ineligible SRF Project Costs: (12,160,000)
Revised Eligible SRF Project Cost: $11,785,000
Revised CWSRF Loan Amount: $ 9,663,700
Anticipated Principal Forgiveness: 2,121,300
Revised Total Award Amount: $11,785,000
Financing
The series 2026 SRF-6 Junior Lien Bonds will be sold through the MFA under the state of Michigan’s CWSRF program. The amount to be financed is within GLWA’s authorized bond limits. The bonds limits establish the maximum principal amount of debt GLWA is authorized to issue for the project (i.e., the not to exceed (NTE) amount). This bond will be supported by GLWA Board Resolution 2024-359, “Authorizing Publication of Notice of Intent (NOI) to Issue Sewage Disposal System Revenue Bonds” in the amount of not to exceed $300,000,000, approved on November 21, 2024. This is the sixth series of sewer bonds from that NOI.
The calculation of this Series Ordinance not to exceed (NTE) amount includes a 10% loan financing contingency to accommodate potential fluctuations in the final award amount, which is standard GLWA practice. The NTE calculation is summarized below:
Estimated SRF Project Cost: $11,785,000
Loan Financing Contingency: 1,178,500
Series Ordinance NTE amount: $12,963,500
JUSTIFICATION
The approval of this Series Ordinance (2026-05) is the next formal step in the bond issuance process, establishing the guidelines for the CWSRF bonds. It designates the bonds as 2026 SRF-6 Junior Lien Bonds, authorizes the CEO and/or CFO/Treasurer to execute the final terms of the bonds, pay issuance costs, and sign the Purchase Contract and Sale Order. The Board must approve a resolution adopting this Series Ordinance and the proposed action authorizes the bonds to be issued.
GLWA secures capital improvement financing for DWSD in accordance with foundational documents related to the establishment of GLWA. Pursuant to Section 7.2(b) of the Regional Sewage Disposal System Lease between the City of Detroit and GLWA, the Authority shall cooperate with the City in the implementation of this Detroit capital improvement, including financing through the Authority. GLWA is the loan applicant on behalf of DWSD, and DWSD will be the CWSRF loan recipient. All project costs financed by GLWA through this program, and resulting principal and interest payments on the bonds, will be directly allocable to the DWSD local system.
A benefit of the SRF program is the low interest rates. Potential dollar savings are significant when compared to municipal bond interest rates in a market-based transaction. DWSD has been designated a significantly overburdened applicant. The current interest rate on a 20-year and 30-year loan for a significantly overburdened applicant is 1.00%.
Compared to an estimated market-based rate of 4.50%, potential interest savings on an $11.8 million, 30-year loan would be approximately $8 million.
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.
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 program bonds and resulting principal and interest payments on the bonds, will be directly allocable to the DWSD local system. Debt service for the project is anticipated to begin in April 2027 and will be included as part of the FY 2027 - FY 2028 biennial budget.
COMMITTEE REVIEW
This matter was reviewed by the GLWA Audit Committee at its meeting on May 22, 2026. The Audit Committee unanimously recommends the Board of Directors approve a resolution for the Series Ordinance Authorizing Issuance and Sale of Sewage Disposal System Revenue Bonds in an Aggregate Amount Not to Exceed $12,963,500 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.