Royal Oak moves forward with notice to issue up to $35M water and sewer bonds to speed infrastructure work

The Royal Oak City Commission on Nov. 10 authorized staff to publish a notice of intent to issue up to $35 million in limited‑tax general obligation bonds to accelerate water and sewer capital work, including: prioritized water main replacements coordinated with planned road projects; a state‑mandated residential lead service line replacement program (estimated at about $8 million over five years); and replacement/modernization of residential and commercial water meters to wireless reads and customer dashboards.

City staff framed the bond as a cost‑effective approach for major utility capital needs, noting three management objectives: improve efficiency by coordinating water‑main replacements with roadwork, improve service by moving to modern wireless meters that reduce estimated billing and enable proactive leak detection, and comply with the state lead‑line mandate. City staff and the financial advisor presented modeled debt-service scenarios at 20, 25 and 30 years; the 20‑year scenario projected total principal plus interest of roughly $44.6 million (modeled interest assumptions: ~4% for 20 years).

Staff recommended publishing the notice in the Oakland Press rather than the Royal Oak Review for timing reasons (Royal Oak Review publishes twice a month and would delay the statutory 45‑day referendum window; Oakland Press publishes more frequently and reaches broader readership including apartment occupants). The publication triggers a 45‑day petition period during which 10% of registered city electors could require a referendum. If no petition is filed, the city will proceed with preparing for a competitive bond sale, return with final sizing/term recommendations and select the bid producing the lowest true interest cost.

Commissioners asked technical questions about meter warranties (field device life ~20 years with 10‑ and 20‑year warranty components noted by vendor), how many miles of pipe would be replaced (staff said the proposed projects are a subset of the citywide need), and whether debt is paid from rates. Staff said debt service is expected to be paid from the water and sewer enterprise fund (no property tax increase intended), but because the bonds are limited‑tax general obligations the city's full faith‑and‑credit remains a backstop in the unlikely event enterprise revenues fall short. Commissioners approved the recommendation to publish the notice with the Oakland Press revision and the motion passed by voice vote.

Next steps: publish the notice of intent in the Oakland Press, observe a 45‑day petition period, then if no petition proceed with bid preparation and a competitive bond sale in early 2026 with staff returning to the commission on final sizing/term prior to sale.