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Mount Clemens approves notices of intent to pursue state loans for water and sewer projects
Summary
The city adopted preliminary notices of intent to issue revenue bonds for a roughly $42 million drinking-water project (not to exceed $45 million) and to accept a roughly $6.12 million clean-water loan, both at the State Revolving Fund program rate of about 2%. Commission approval was unanimous.
Mount Clemens officials on Dec. 4 authorized staff to publish notices of intent tied to two state revolving fund loans that will fund major water and sewer upgrades.
City attorneys and financial advisers told the commission the city’s drinking-water application was approved for about $42 million in project funding through the Drinking Water State Revolving Fund (DWSRF). The resolution before the commission set a not-to-exceed bond authorization of $45 million; staff said roughly half the $42 million award is expected to come from grants or principal forgiveness under state and federal subsidy programs, which would reduce the city’s ultimate repayment obligation to an estimated amount in the low tens of millions. The program’s subsidized interest rate is about 2% regardless of the chosen maturity schedule, officials said.
Pat McGau, representing bond counsel, said the notice of intent is a procedural, preliminary step that alerts the public and does not itself authorize issuance of bonds. “The interest rate is going to be 2%,” Pat McGau said, adding that final grant and forgiveness amounts, and the exact loan size, will be determined after bids are received and financing documents are finalized.
Commissioners were briefed on the financing timeline: design and bidding through spring, construction bidding in late spring or early summer, and a likely return to the commission this summer to adopt a bond ordinance and finalize the financing. Staff emphasized the city can choose a 20-, 30- or 40-year repayment term based on system revenues and debt-service capacity.
On the sewer side, staff reported Mount Clemens was awarded approximately $6,120,000 through the Clean Water State Revolving Fund (CWSRF) to pay for sewer rehabilitation and replacement of a sludge-handling facility. Unlike the water award, the CWSRF allocation carries no principal forgiveness or grant dollars; the council approved a not-to-exceed authorization of $8 million to provide a contingency buffer in case bids run higher.
Both notices of intent were approved by unanimous roll-call votes. City Manager Shipman and bond counsel said the city will receive precise grant/forgiveness and loan figures when construction bids are finalized, and that the commission will be asked to adopt a bond ordinance and sign final financing documents before any bonds are issued.
What happens next: engineers will complete design and solicit construction bids; staff will report final project costs and financing terms to the commission before any bond issuance is authorized.
