Title
Resolution for Approval of Series Ordinance Authorizing Issuance and Sale of Sewage Disposal System Revenue Bonds in an Aggregate Amount Not to Exceed $107,562,667 (Ordinance 2026-04) for FY 2027 Clean Water State Revolving Fund Projects
Body
Agenda of: May 27, 2026
Item No.: 2026-147
Amount: Not to Exceed $107,562,667
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 27, 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 $107,562,667 (Ordinance 2026-04) for FY 2027 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 $107,562,666 (Ordinance 2026-04) for FY 2027 Clean Water State Revolving Fund projects, 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 Great Lakes Water Authority (GLWA) annually applies for low-interest financing through the Michigan Department of Environment, Great Lakes, and Energy (EGLE) Clean Water State Revolving Fund (CWSRF). Following a public hearing on April 23, 2025, the GLWA Board adopted a resolution approving two projects for funding consideration: 1) Hubbell Southfield Combined Sewer Overflow (CSO) Facility Improvements and 2) Water Resource Recovery Facility (WRRF) Improvements to the Sludge Feed System for Solids Processing. These projects were awarded funding for EGLE’s FY 2026 CWSRF funding year with an anticipated loan closing date in July 2026.
This resolution is primarily driven by two critical components: CWSRF project award and the subsequent financing. The project award process is administered by EGLE, while financing is facilitated through the Michigan Finance Authority (MFA).
CWSRF Projects and Award
In October 2025, EGLE confirmed funding for the Hubbell Southfield and WRRF Improvements projects 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, funding allocation, total award, and current estimated project costs are summarized below.
Hubbell Southfield CSO Facility Improvements - (Series 2026-SRF-4; CIP No. 273001; SRF No. 6023-01): This project includes improvements to the existing flushing, dewatering, chemical disinfection, electrical, instrumentation, and control systems, along with site upgrades and the construction of a new chemical storage building at the Hubbell Southfield CSO Facility.
CWSRF Loan Amount: $ 58,711,950
Principal Forgiveness: 8,773,050
Total IUP Award Amount: $ 67,485,000
Project Cost Estimate Change (2,342,935)
Current Estimated Project Cost: $ 65,142,065
WRRF Improvements to the Sludge Feed System for Solids Processing - (Series 2026-SRF-5, CIP No. 213006, SRF No. 6024-01): This project consists of improvements to the sludge feed system at 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.
CWSRF Loan Amount: $23,098,500
Principal Forgiveness: 3,451,500
Total IUP Award Amount: $26,550,000
Project Cost Estimate Change 6,092,177
Current Estimated Project Cost: $32,642,177
Cost estimates presented at the public hearing may differ from current figures, as design refinements and market-driven price adjustments occur throughout project development. Project designers continuously update estimates as additional information becomes available during the competitive bidding process.
When cost estimates result in an increase, GLWA typically requests additional funding to cover the revised project amounts. EGLE’s approval is based on CWSRF program guidelines and availability of funds.
Financing
The series 2026 SRF-4/5 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 the projects (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 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 fourth and fifth series of sewer bonds from that Notice of Intent.
The calculation of the Series Ordinance NTE amount reflects a combined potential loan amount of $107,562,667 (Hubbell Southfield: $71,656,272; WRRF Improvements: $35,906,395). The NTE amount also contains 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 with additional details in Attachment 1.
Current Estimated SRF Project Cost (combined): $ 97,784,242
Loan Financing Contingency: 9,778,425
Series Ordinance NTE amount: $107,562,667
JUSTIFICATION
The approval of this Series Ordinance (2026-04) 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-4/5 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.
Pursuing CWSRF funding for these projects allows GLWA to take advantage of low-interest loans below market municipal rates. GLWA was designated as an overburdened community that qualifies for a lower interest rate and longer loan terms than a standard applicant. Compared to a market-based rate of 4.50%, the interest savings on these projects are substantial. By way of example, the combined potential interest savings for a 20-year loan is approximately $30.8 million (see Attachment 2 for additional details). The financing loan term is matched to the asset life (e.g., a 25-year asset will utilize a 20-year loan).
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
Debt service for the project is anticipated to begin in April 2027 and will be included as part of the FY 2028 - FY 2029 biennial budget.
COMMITTEE REVIEW
This matter was reviewed by the GLWA Audit Committee at its meeting on April 24, 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 $107,562,667 (Ordinance 2026-04) for FY 2027 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.