Title
Resolution Regarding Approval of Series Ordinance Authorizing Issuance and Sale of Water Supply System Revenue Bonds in an Aggregate Amount Not to Exceed $59,294,865 (Ordinance 2026-06) for FY 2026 Drinking Water State Revolving Fund (DWSRF) Projects
Body
Agenda of: May 28, 2026
Item No.: 2026-189
Amount: Not to Exceed $59,294,865
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 Water Supply System Revenue Bonds in an Aggregate Amount Not to Exceed $59,294,865 (Ordinance 2026-06) for Fiscal Year (FY) 2026 Drinking Water State Revolving Fund (DWSRF) 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 Water Supply System Revenue Bonds in an Aggregate Amount Not to Exceed $59,294,865 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 to the Michigan Department of Environment, Great Lakes, and Energy (EGLE) for low-interest funding consideration through the Drinking Water State Revolving Fund (DWSRF). On April 23, 2025, the DWSD Board of Water Commissioners held a public hearing and adopted a resolution approving the following projects: Water System Improvements in Various District 5 and 6 Neighborhoods of Detroit and Lead Water Service Line Replacement (LSLR) - Cadillac Heights Detroit. The projects were awarded funding for EGLE’s FY 2026 funding year with an anticipated loan closing date in August 2026. To issue debt, the GLWA Board must adopt a resolution authorizing a Series Ordinance (2026-06).
There are two considerations related to this resolution: the projects awarded funding and the subsequent financing. The award process is administered by EGLE, while financing is facilitated through the Michigan Finance Authority (MFA).
DWSRF Projects and Award
In October 2025, EGLE confirmed funding for the Water System Improvements and Lead Water Service Line Replacement projects on the FY 2026 DWSRF Intended Use Plan (IUP). The award amount is based on estimated project cost submitted to EGLE in the final project plan. The project description, funding allocation, total award, and current estimated project costs are summarized below.
Water System Improvements in Various District 5 and 6 Neighborhoods of Detroit - (Series 2026-SRF-2; SRF No. 7932-01): This project is comprised of two contracts, referenced as Project A and Project B. Both contracts will be supported by this series ordinance and financed through a single DWSRF loan. The construction of both projects includes water main replacement and rehabilitation, the removal and replacement of lead and galvanized water service lines in various neighborhoods in Detroit.
Project A (Contract No. WS-751): neighborhoods of Eastern Market, Forest Park, North End, Islandview, West Village, and Medical Center.
Project B (Contract No. WS-752): neighborhoods of Central Southwest, Springwells, Michigan Martin, Hubbard Farms, & Claytown.
DWSRF Loan Amount: $30,800,000
Principal Forgiveness: 9,200,000
Total IUP Award Amount: $40,000,000
Project Cost Estimate Change 4,785,625
Current Estimated Project Cost: $44,785,625
Lead Water Service Line Replacement - Cadillac Heights Detroit - (Series 2026 SRF-3; SRF No. 7932-02): This project in comprised of lead service line replacement and rehabilitation at select locations in the City of Detroit Cadillac Heights neighborhood.
DWSRF Loan Amount: $ 5,000,000
Principal Forgiveness: 5,000,000
Total IUP Award Amount: $10,000,000
Project Cost Estimate Change (881,203)
Current Estimated Project Cost: $ 9,118,897
Cost estimates presented at the public hearing may differ from current amounts, as price adjustments occur throughout project development. When cost estimates result in an increase, additional funding may be requested to cover the revised project estimates. EGLE’s approval is based on DWSRF program guidelines and availability of funds.
Financing
The Series 2026-SRF-2/3 Junior Lien Bonds (with 2 representing Water System Improvements and 3 representing LSLR) will be sold through the MFA under the state of Michigan’s DWSRF program. The amount to be financed through the DWSRF bonds is within GLWA’s authorized 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). These bonds will be supported by GLWA Board Resolution 2022-312, “Resolution of the Great Lakes Water Authority Authorizing Publication of Notice of Intent (NOI) to Issue Water Supply System Revenue Bonds in a principal amount not to exceed (NTE) $250,000,000” approved on November 21, 2024. This is the fifth and sixth series of water bonds from that NOI.
The NTE amount contains a 10% loan financing contingency to accommodate potential fluctuations in the final award amount which is standard GLWA practice. With this contingency, the combined potential loan amount is $59,294,865 (Water System Improvements: $49,264,188; LSLR: $10,030,677) for the Series Ordinance NTE amount (calculation shown on Attachment 1).
JUSTIFICATION
The approval of this Series Ordinance (2026-06) is the next formal step in the bond issuance process. This series ordinance sets forth the guidelines for CWSRF bonds, designates the bonds as 2026 SRF-2/3 Junior Lien Bonds, and 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 the 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 Water Supply 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 DWSRF 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. The current interest rate on a 20-year and 30-year loan for a significantly overburdened applicant is 1.00%. By way of example, the anticipated DWSRF loan amount for Water System Improvements Project will be $44.8 million (rounded). Potential interest savings on a 30-year SRF loan would be approximately $30.4 million when compared to a 4.5% estimated market-based rate. See Attachment 2 for additional interest savings calculations.
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 DWSRF loans issued on behalf of the DWSD, and DWSD will be the DWSRF 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 both projects 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 Water Supply System Revenue Bonds in an Aggregate Amount Not to Exceed $59,294,865 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.