Mount Clemens adopts bond ordinance to finance sewer improvements

The Mount Clemens City Commission voted to adopt a bond ordinance authorizing Junior-lien revenue bonds, Series 2024, in an amount not to exceed $8 million to finance improvements to the city’s wastewater disposal system.

City manager Mr Shipman explained the ordinance is required for bond issuance tied to the Clean Water State Revolving Fund program and that the bonds will be payable from net sewer-system revenues. Bond counsel from Miller Canfield summarized the structure and protections for the city, saying the bonds are revenue bonds secured by system revenues only and describing Junior-lien status as similar to a second mortgage, below any future senior debt.

“These are revenue bonds; they are secured only by revenues of the sewer system,” bond counsel said, describing the lender as the Michigan Finance Authority and noting the program’s low rates and user-friendly features. The staff report and counsel said the Series 2024 bonds are expected to be sold through the Michigan Finance Authority, payable in 30 annual principal installments at an interest rate stated as 2% in the presentation.

Staff also explained the background on the city’s Clean Water State Revolving Fund application: the initial CWSRF application was for about $6.22 million, and subsequent clarification allowed engineering costs to be included. Staff submitted a request to increase the eligible amount and reported a verbal commitment to cover up to $7.6 million for project costs.

Commissioners asked clarifying questions about the bond cushion, the meaning of Junior-lien status for future borrowing and the city’s rate structure; staff and the city’s financial advisor said the current rate structure has been reviewed and is considered sufficient to cover debt service. The motion to adopt the ordinance carried on a roll-call vote.