Title
Resolution to Adopt the Great Lakes Water Authority Project Plans for Fiscal Year (FY) 2026 Clean Water State Revolving Fund (CWSRF) Funding Consideration
Body
Agenda of: April 23, 2025
Item No.: 2025-105
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: April 23, 2025
RE: Resolution to Adopt the Great Lakes Water Authority Project Plans for Fiscal Year (FY) 2026 Clean Water State Revolving Fund (CWSRF) Funding Consideration
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 attached Resolution to Adopt the GLWA 1) Water Resource Recovery Facility (WRRF) Improvements to the Sludge System for Solids Processing, 2) Hubbell Southfield Combined Sewer Overflow (CSO) Facility Improvements, and 3) CSO Facilities Improvements II Project Plans for FY 2026 Clean Water State Revolving Fund (CWSRF) Funding Consideration and authorizes the CEO to take such action as may be necessary to accomplish the intent of this vote.
BACKGROUND
The Great Lakes Water Authority (the “GLWA”) has identified three (3) projects in the FY 2025 to FY 2029 Capital Improvement Plan (CIP) for submittal to the Michigan Department of Environment, Great Lakes, and Energy (EGLE) FY 2026 SRF financing program. The deadline for submitting all CWSRF project plans to EGLE is May 1, 2025. Prior to submitting the project plans, GLWA must hold a public hearing to present the project plans, which is scheduled for April 23, 2025, at 2:00 pm.
At the public hearing, a summary of each project plan will be presented. The Public Hearing Notice and project plans for the following GLWA projects will be posted on the GLWA website <https://www.glwater.org/>:
1) WRRF Improvements to the Sludge System for Solids Processing
2) Hubbell Southfield CSO Facility Improvements
3) CSO Facilities Improvements II
Once the public hearing is closed, a resolution to adopt the final project planning documents will be scheduled for action by the GLWA Board of Directors at its regularly scheduled meeting also on April 23, 2025.
The attached Resolution approves the project plans, directs GLWA staff to address all public comments, prepare responsiveness summaries, and publish the final Project Plans; authorizes GLWA’s CEO to transmit the final FY 2026 CWSRF Project Plans to EGLE; and to secure a CWSRF loan for the projects. 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.
The Projects:
WRRF Improvements to the Sludge Feed System for Solids Processing (CIP #213006) - This project consists of improvements to the sludge feed system at the WRRF which conveys sludge from six (6) sludge storage tanks to three (3) dewatering facilities. The improvements will replace aging pumping equipment and incorporate sludge feed conveyance loops to provide additional system flexibility, redundancy, and resiliency. The total cost of this project is estimated at $24.4 million.
Hubbell Southfield CSO Facility Improvements (CIP #273001) - This project includes upgrades to existing facility systems which includes flushing, dewatering, chemical disinfection, screening, instrumentation and controls, architectural, Heating, Ventilation, and Air Conditioning (HVAC), electrical, and site improvements, along with other miscellaneous enhancements. The project aims to bring the Hubbell-Southfield CSO Facility into compliance with current codes and standards, standardize equipment, enhance operational efficiency, improve reliability and resiliency, and strengthen safety measures. The total cost of this project is estimated at $67.5 million.
CSO Facilities Improvements II (CIP #270006) - The project consists of safety improvements and building rehabilitation at all nine (9) CSO facilities. The safety improvements include fall protection, upgraded eyewash stations, and miscellaneous improvements based on site-specific requirements. The St. Aubin Screening Disinfection Facility improvements also include disinfection, screening, electrical, HVAC systems, as well as various site improvements. The control upgrades at Baby Creek and Belle Isle CSO facilities consists of installing new flow monitoring, improvements to the gas monitoring and communications equipment. The proposed improvements will increase facility reliability, flexibility, operation, and safety, and decrease maintenance at the facilities. The total cost of this project is estimated at $26.8 million.
Note: The project cost estimates contained on the Public Hearing Notice may differ from those in this Board letter as design details and costs are continually refined as we progress towards the formal bid process. The market is ever evolving, and the project designers continuously re-examine the estimates, adjusting based on these parameters.
JUSTIFICATION
GLWA is seeking low interest loan assistance through the CWSRF program for the proposed projects. Although the interest rate for FY 2026 will not be published by EGLE until approximately October 2025, the current year’s interest rate of 2.50% for a 20-year loan and 2.75% for a 30-year loan is lower than present conventional revenue bond interest rates. GLWA may also qualify as an “overburdened applicant” and if eligible, the interest rates for a 20-year loan and 30-year loan will decrease to 2.00%. The time period for financing will be aligned with the life of the asset. For example, a 25-year asset would be funded with a 20-year, not 30-year loan.
Potential savings are significant when compared to municipal bond interest rates in a market-based transaction. Comparing the current CWSRF overburdened applicant status interest rate of 2% to the estimated market-based rate of 4.5%, potential interest savings using the CWSRF loan are shown below.
• WRRF Improvements to the Sludge System for Solids Processing - CWSRF of $24.4 million
20-year loan, potential interest savings of $7.7 million
30-year loan, potential interest savings of $12.3 million
• Hubbell Southfield CSO Facility Improvements - CWSRF of $67.5 million
20-year loan, potential interest savings of $21.2 million
30-year loan, potential interest savings of $33.9 million
• CSO Facilities Improvements II - CWSRF of $26.8 million
20-year loan, potential interest savings of $8.4 million
30-year loan, potential interest savings of $13.5 million
A summary of this analysis is also provided as Attachment 1 to this Board Letter.
Another advantage of utilizing the CWSRF is that interest costs are only incurred on the amount drawn from the loans as project expenditure 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 requirements.
BUDGET IMPACT
Debt service interest payments on these projects would begin in the fall of 2027 and will be included as part of the FY 2028 financial plan.
COMMITTEE REVIEW
This matter was presented to the GLWA Audit Committee at its meeting on March 26, 2025. The Audit Committee unanimously recommended that the Great Lakes Water Authority Board of Director approve the attached Resolution to Adopt project plans for 1) Water Resource Recovery Facility (WRRF) Improvements to the Sludge System for Solids Processing, 2) Hubbell Southfield Combined Sewer Overflow (CSO) Facility Improvements, and 3) CSO Facilities Improvements II for FY 2026 Clean Water State Revolving Fund (CWSRF) Funding Consideration at its regularly scheduled meeting on April 23, 2025 at 2:00 p.m.