The city of Grand Rapids intends to issue up to $120.5 million in a series of revenue bonds to pay for about a dozen sewer and water improvement projects. The resulting debt from the issuances will not be a general obligation for the city, as revenues from the water and sewer departments will be used to pay bond buyers.
The city is looking to sell bonds worth up to $80 million to make upgrades to the sanitary sewer system. As much as $32.6 million of that total could come from Recovery Zone Economic Development bonds, part of last year’s America Recovery and Reinvestment Act, and Build America Bonds. Both bonds will reimburse the city for its interest costs, with the RZED bonds refunding 45 percent and the BABs 35 percent. The remaining amount will come from tax-exempt municipal revenue bonds.
City Bond Officer Jana Wallace said the exact amount of RZED bonds and BABs that will be issued for the projects won’t be known until the city hears from the state about its request for another $10 million in RZED bonds. But she said she was told by the state that very few cities have asked for a larger allotment and she felt the city’s chances were fairly good that its request would be approved. The city’s initial RZED allocation was $16.7 million.
The bond revenue would go toward making improvements to the wastewater treatment plant and other facilities in the system, along with upgrades to several lift stations. Other projects like the city’s ongoing work to separate the sanitary and storm sewers on the east side also are on the list.
Wallace said the city wants to close the bond transactions by Dec. 15 because the deadline for the RZED bonds and the BABs is Dec. 31. If Congress extends the deadlines for both, Wallace said the interest reimbursement from the BABs would likely drop from 35 percent to 28 percent.
“We only have to price and close the bonds by Dec. 31,” she said. “Not only are interest rates low, we’re also finding that we’re getting good prices for these.”
The city would sell up to another $40.5 million in municipal bonds for water system projects that include making improvements to the Lake Michigan Filtration Plant, constructing a new water line into Cascade Township, and upgrading a number of water tanks and pump stations.
“We are not planning to do any complex financing for these,” said Wallace.
City commissioners approved the bond amounts last week.