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Muskegon City staff outline intent to issue up to $15 million in sewer revenue bonds
Summary
City bond counsel and financial advisors briefed the commission on a notice-of-intent resolution to issue up to $15 million in sewer revenue bonds, explaining the state revolving fund (SRF) 2% subsidized rate, possible principal forgiveness, and a 45‑day petition window to trigger a referendum.
The Muskegon City Commission heard a presentation on an intent-to-bond resolution that would authorize the city to issue revenue bonds for sewer system projects in an amount not to exceed $15,000,000. Bond counsel Pat McGow told commissioners that the notice of intent is the first procedural step; it does not obligate the city to borrow the full amount but preserves borrowing capacity for several years of projects.
Pat McGow explained revenue bonds are repaid from utility user charges rather than general-tax levies and said the city uses the state revolving fund (SRF) program to obtain low, subsidized financing. "What you have before you tonight is a notice of intent resolution for sewer bonds in an amount not to exceed $15,000,000 to pay for various projects," McGow said, noting the SRF offers below-market fixed rates and some principal forgiveness.
Warren Kramer, municipal financial advisor with MFCI, described the advisory role in preparing applications, obtaining investment-grade ratings where required and assisting with closing. Kramer and McGow said this year’s sewer project is expected to be substantially smaller than the notice cap — roughly $3.4 million to $5.0 million depending on final bid and forgiveness amounts — and that the city requested the larger $15 million cap to cover anticipated multi‑year projects under the SRF priority list.
Commissioners pressed staff for specifics. McGow said the SRF program currently offers a subsidized fixed interest rate of 2% and that maximum amortization under the clean-water (sewer) program is 30 years (40 years for drinking-water projects). He described an example of principal forgiveness on the current loan of roughly $650,000, reducing the net debt the city would repay.
McGow also outlined a statutory referendum process: once the commission adopts the resolution and the clerk publishes the notice, citizens have 45 days to file a petition signed by at least 10% of registered city voters to force an election on the issuance. "That has not happened in the past," he said, but staff will publish the notice and return later with precise financing amounts for any year the city decides to issue bonds.
City staff emphasized the February action is a legal notice of intent — a step to preserve the city’s capacity to participate in future SRF rounds — and said any specific borrowing that affects the debt-service fee or customer bills will be presented separately when a particular project and financing are authorized.
The commission did not take a final borrowing vote in the work session; staff said the item will return later this summer with project‑specific authorizations and expected debt‑service impacts.
