Hamtramck moves forward with lead service line replacement plan; state loan covers half

Hamtramck officials on Nov. 25 approved engineering services and the initial financing steps to replace lead service lines across the city, advancing a Drinking Water State Revolving Fund (DWSRF) package that would forgive half of the project cost and finance the rest via a revenue bond.

Staff said the state offered a DWSRF package with 50% loan and 50% principal forgiveness specifically for lead service line replacement. The program would cover roughly 615 service lines across about 17 blocks. Council approved hiring Hennessy Engineers for design and engineering services; staff provided an engineering cost estimate of $326,900.

Finance and legal staff outlined the financing plan: the total project cost is about $5.6 million, of which approximately $2.8 million would be principal-forgiven and $2.8 million would be financed by a revenue bond at a low state-supported interest rate (council referenced about 1% as the program rate). Council approved resolutions to engage bond counsel and a financial adviser and to publish notice of intent to issue revenue bonds as part of the DWSRF process, with the council to receive construction bids and award construction contracts in later steps.

Councilmembers asked whether the program would increase water bills. Staff responded that there would likely be some adjustment to water rates over time to service the bond, though federal grants or other funding sources could later reduce or replace the bond need. Some councilmembers urged removing a recent rate increase (15% was referenced) and exploring grant options before finalizing permanent rate changes.

Next steps: engineering design work will proceed, the city will complete required DWSRF milestones, publish bond-notice required by statute and later return to council for contract awards when bids are received.