Title
Resolution for Approval of Series Ordinance Authorizing Issuance and Sale of Sewage Disposal System Revenue Bonds in an Aggregate Amount Not to Exceed $115,427,477 (Ordinance 2025-05) for FY 2026 Clean Water State Revolving Fund Project
Body
Agenda of: November 20, 2025
Item No.: 2025-338
Amount: Not to Exceed $115,427,477
TO: The Honorable
Board of Directors
Great Lakes Water Authority
FROM: Suzanne R. Coffey, P.E.
Chief Executive Officer
Great Lakes Water Authority
DATE: November 20, 2025
RE: Resolution for Approval of Series Ordinance Authorizing Issuance and Sale of Sewage Disposal System Revenue Bonds in an Aggregate Amount Not to Exceed $115,427,477 (Ordinance 2025-05) for FY 2026 Clean Water State Revolving Fund Project
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 $115,427,477 (Ordinance 2025-05) for FY 2026 Clean Water State Revolving Fund Project 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). The Rehabilitation of Screened Final Effluent (SFE) Pump Station project was awarded funding for EGLE’s FY 2026 funding year.
The SFE Pump Station project has an anticipated loan closing date of February 9, 2026, and to issue debt, a Series Ordinance (2025-05) must be adopted by the GLWA Board. Due to the timing for Board review and the Michigan Finance Authority (MFA) FY 2026 Financing Schedule, the Series Ordinance will need to be adopted in 2025 and designated as a 2025 Series Ordinance; however, the bond itself will be designated 2026 (Series 2026-SRF-1) based on the closing date.
There are two key drivers related to this resolution: CWSRF funding and financing.
CWSRF Funding
Rehabilitation of SFE Pump Station - (CIP No. 216008, SRF No. 5839-01): On May 22, 2022, the GLWA Board adopted a resolution approving the SFE Pump Station project plan for submittal to EGLE’s FY 2023 CWSRF program following a public hearing on the same date. The project was not funded in FY 2023 but was resubmitted several times for reconsideration. Ultimately, the project was approved for funding in the amount of $104,265,000 as notified on EGLE’s final FY 2026 CWSRF Intended Use Plan (IUP) in October 2025. The funding allocation is summarized below.
CWSRF Loan Amount: $ 90,710,550
Principal Forgiveness: 13,554,450
Total IUP Award Amount: $104,265,000
The current estimated project cost has increased to $104,934,070, which differs from what was presented at the Public Hearing. This is due to design detail and cost estimates being refined during the formal bid process. GLWA intends to request additional CWSRF funding of $669,070 to include this increased cost. ELGE’s approval is based on availability of funds.
Financing
The 2026 SRF-1 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. This bond will be supported by two GLWA Board approved resolutions. Resolution 2022-312, “Authorizing Publication of Notice of Intent (NOI) to Issue Sewage Disposal System Revenue Bonds” in a principal amount not to exceed $650,000,000 (the “Notice of Intent”) was approved on July 27, 2022, and is the tenth series of sewer bonds from that NOI. 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 first series of sewer bonds from that NOI.
The calculation for this Series Ordinance represents a potential loan amount of $104,934,070, which is the revised estimated project cost based on current bid information. 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 NTE calculation is summarized below with additional details in Attachment 1 Table 1.
Estimated SRF Project Cost: $104,934,070
Loan Financing Contingency: 10,493,407
Series Ordinance NTE amount: $115,427,477
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 1.5 loan closing in February 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-1 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 anticipated CWSRF loan for the SFE Pump Station project is approximately $105 million (rounded). Compared to an estimated market-based rate of 4.5%, potential interest savings on a 20-year loan would be approximately $33.0 million and $52.8 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
Debt service for the project is anticipated to begin in April 2027 and will be included as part of the FY 2026 - FY 2027 biennial budget.
COMMITTEE REVIEW
This matter was reviewed by the GLWA Audit Committee at its meeting on October 24, 2025. 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 $115,427,477 (Ordinance 2025-05) for FY 2026 Clean Water State Revolving Fund Project 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.