By Jim Bloch
The city of Port Huron is on the verge of issuing more than $7 million in revenue bonds for improvements to its sewage disposal system.
The bonding of the city’s utilities is authorized under Michigan Public Act 94 of 1933, as amended.
The city council voted unanimously at its regular meeting Oct. 14 to approve the issuance.
City Manager James Freed discussed the city’s bonding strategy.
“This is authorizing us to issue up to $7.685 million in sewer revenue-backed bonds at an interest rate not to exceed six percent,” said Freed, as heard on the recording of the meeting posted on YouTube. “Of course, we don’t anticipate having the interest rate anywhere near that. We’re hoping the interest will be around 3.5-4.5 percent… This will be one of two issuances. Because we’re doing such large repairs at the facility, we want it out in two phases – because we won’t need a lot of the proceeds from the bonds for another 24-36 months. There’s no point in borrowing money you don’t need and paying interest on it for two-three years.”
The work on the system will be extensive. According to the resolution approved by council, the improvements include “the design, acquisition, construction, and installation of a new raw sewage pump, new collection and conveyance equipment in the primary clarifier and secondary clarifier tanks, lighting improvements in the primary, secondary and thickener buildings, a new splitter box, piping and electrical improvements in the thickener building, replacement of the secondary building roof, replacement of the makeup air units in the grit bay, grit channel room, primary building and thickener building, repairs to the existing screw pumps, installation of access points to the screw pump room and solids handling transfer pump galley, cleanout of the retention basin and piping repairs, an odor control system evaluation, existing odor control and air handling system repairs, and a new odor control system at the wastewater treatment plant and rehabilitation of the 10th Street, Holland Avenue, Indian Creek and Thomas Street sanitary pump stations, as well as all work, equipment, and appurtenances necessary or incidental to these improvements and such other System improvements as the City shall determine to make.”
The city’s bond counsel is Dickenson Wright PLLC.
Freed said there were some benefits to limiting the amount of the bond.
“Also, we wanted to keep this bond under $10 million,” said Freed. “There’s some taxing reasons with the banks and it will make it a lot easier to sell the bonds and more lucrative to get better rates. So there’s a strategic nature to why we chose the number we did and the time that we did to help pay for the new odor control system and the major upgrades at the … wastewater plant. I just finished a bond call with Standard & Poor and hopefully we’ll have our sewer bond rating in the next couple of weeks. The sewer system has never had a bond rating before, unlike the water system and the general obligation bonds for the general fund.”
“What are the repercussions – will there be any – on our citizens, our residents?” asked council member Anita Ashford.
“No,” said Freed. “This has all been factored into the budget. This has all been factored into the rate study. In fact, we’re able to handle this new bond payment because of the reduction in sewer separation payments… So for average citizens, your rates will not be skyrocketing.”
“Plus the fact that (they are) already high as it is,” said Ashford.
“Most definitely,” said Freed.
Jim Bloch is a freelance writer based in St. Clair, Michigan. Contact him at bloch.jim@gmail.com.