The Marine City Commission on Aug. 1 voted unanimously to move forward with issuing $12.225 million in bonds to fund part of a Drinking Water State Revolving Fund project.
Commissioner Brian Ross made the motion to approve the ordinance, which provides for the acquisition, construction, installation, furnishing and equipping of additions and improvements to the city’s water supply and sewage disposal system. City Manager Scott Adkins said the ordinance is a portion of the safe drinking water program that the city has ongoing.
“We were required under an administrative order from (the Michigan Department of Environment, Great Lakes and Energy) to make improvements to the water system, including the water plant,” Adkins said. “When this all started by way of an order in March of 2023, at this point we were in the process of seeking additional assistance from the state of Michigan for both a grant and a loan.”
He said at the outset, the project would have cost about $65 per month to each user of the water system in the city.
“Upon making application and receiving a grant from the state of Michigan for the safe drinking water program, that cost was then diminished down to approximately $30 per resident per month — still a high dollar amount,” he said. “But fortunately through the safe drinking water program, the state revolving fund for water also had a loan program, a 2% loan that could be taken up to 40 years. It’s a guaranteed loan and supported by the state of Michigan through the drinking water revolving fund.”
“With that and an authorization by the city commission to move forward on the project, it then took the obligation down to approximately $15 per month per user on this cost and that was determined to be a revenue repayment, so this is why this is a revenue bond process, meaning through the user fees that loan will be paid off over 40 years at a 2% rate,” he added.
Adkins said Marine City was one of few communities in the state that received both a grant and a loan to cover an estimated $26 million project.
“So we are in a very good position to be able to get both a grant and a loan,” he said. “This is part of the process on the loan to be able to go forward and authorize the sale and distribution of bonds to the city. I can also tell you that we believe based upon where the bids have come in and have been approved and authorized, we are hoping to be able to see this cost at the end of the day between $8 and $11 per month per residential user.”
“Keep in mind that commercial, retail, large industrial users and those with larger meters actually will pay a larger amount because they have more use of the system,” he continued. “But that is a phenomenal position to be in, from having a risk of having to pay — which I don’t know how we would have ever done it — $60 per month down to $30 down to $15 to hopefully between $8 and $11, so a lot of work has been done by a lot of folks.”
He said the bond sale process will occur in mid-August and the closing is set for Aug. 28.
“Which means we will have access to funds within a couple of weeks afterwards to reimburse for costs we’ve already paid, which are just over $750,000 out of our funds already, and then be in a position to be able to roll forward on paying future obligations with this project,” he said.
City Attorney Robert Davis reiterated the city was ordered to do the work.
“This was happening regardless of how we end up paying for it and you’re in a much better position than you were,” he said.
“These are … potentially 100-year fixes,” Adkins said. “That’s the age of the water system components that we’re replacing right now.”
“So this is a long-term solution in preventing problems,” he added.
Mayor Pro Tem Lisa Hendrick said it would repave the majority of the roads, as well.
“Roads, hundreds of individual lead and copper water lines that otherwise would be a separate obligation entirely by the property owner,” Adkins said. “So we’re able to pick up those lines that have been identified as needing replacement, so there are a lot of good, positive pieces that really are saving the residents on what would have been their out-of-pocket costs in that case, too.”
Commissioner O’Brien thanked those involved for getting the grant and loan.
“This grant is monumental,” he said. “It’s gigantic, and the way it was described to me is a once-in-a-lifetime opportunity, to have pulled that in to make this happen.”
Adkins also noted that although the city’s water plant is 90 years old, it is in good shape.
“The improvements that are going to be made will extend the longevity of that plant,” he said. “If we were to construct a brand new water plant, you’re talking at least $50 to $100 million for a water plant alone today. We would never be able to do that.”
“It disheartens me when I hear things that this a backdoor taxation,” Davis said. “Please, this is not a roundabout taxation of the people. This is drinking water of high quality being achieved with very, very lucrative grant monies and other programs. People need quality water and you have quality water.”