Grosse Pointe City voters to decide bond for sewer system improvements

GROSSE POINTE CITY — Grosse Pointe City voters will be asked this August to weigh in on a bond to pay for sewer system infrastructure improvements that officials believe will sharply decrease the risk of future basement flooding and sewage backups.

But while the project price tag is estimated at $28,571,344, that cost is being offset by $21,627,583 from the Federal Emergency Management Agency.

Voters will be asked during the August primary whether to approve a stormwater sewer separation and capital improvements bond not to exceed $15 million, payable over a term not to exceed 21 years. The Grosse Pointe City Council voted unanimously March 18 in favor of ballot language for the bond proposal. The estimated millage that would be levied in 2025 is 1.8894 mills, or $1.89 per $1,000 of taxable value, and the estimated simple average annual millage to retire the bonds is 1.884 mills, or $1.88 per $1,000 of taxable value.

The term of the millage was reduced from the original expected period of 25 years — which was approved unanimously by the council at a meeting Jan. 29 — to the shorter term of 21 years. The bond would be used to cover the City’s stormwater separation matching costs and other capital needs.

While much of the City has separate sewer lines for stormwater and sewage, there are still areas that are combined, meaning that stormwater and sewage flow into the same pipe. During periods of heavy rain, the combined flows can overwhelm the pumps and lead to basement backups. That was one of several factors that played into catastrophic widespread basement flooding and sewage backups throughout the city in the summer of 2021.

Officials are hoping to leverage this bond to possibly meet other big-ticket items as well, so they don’t have to keep going back to voters to ask for more money.

“We have some big pieces of equipment that are going to run well over $1 million,” City Manager Joseph Valentine said.

Over roughly the next four years, City officials anticipate needing to purchase two new garbage trucks, a 10-yard dump truck and a front-end loader.

In addition, the bond would enable the city to take advantage of federal funds for roadwork. In 2025, the City expects to receive federal matching funds through the Michigan Department of Transportation for the resurfacing of St. Clair Avenue from St. Paul Street to Waterloo Street. That project, which is slated to cost about $695,890, would be largely covered by federal funds — to the tune of $569,585 — with the city paying the remaining construction cost of $126,305, plus $142,090 in engineering and testing, for a total cost to the City of $268,395.

Officials are seeking approval of the bond now to take advantage of federal dollars, which substantially reduce the cost of these improvements for the City.

“I feel like we would be remiss if we just let $21 million sit on the table,” Mayor Sheila Tomkowiak said.

She added that she couldn’t remember the city ever receiving a federal grant that was this significant.

Council colleagues concurred with that sentiment.

“We wouldn’t be doing our jobs if we didn’t take advantage of these significant matching (funds),” City Councilman Christopher Moyer said.

Valentine said they arrived at the $15 million bond amount because of several factors. The project cost estimate of about $28 million is from two years ago, but the costs of materials, labor and the like can be up to 40% higher today, he said.

Valentine said the engineering phase on the sewer project would take about a year. He said they would most likely go out to bid on the project this fall and start work next year.

“We have some time to get it done, but we have to get started,” Valentine said.

He told the council that the project needs to be completed within two years of when the City applied for FEMA funding. Valentine said the City received word in October 2023 that it had qualified for FEMA dollars.

During the March 18 meeting, the city’s bond counsel, Stephen Hayduk, of Bendzinski & Co., said interest rates were higher when officials first discussed the bond in November.

“They’ve since come down and leveled out for now,” Hayduk said.

Valentine said the rate for a 21-year bond has now dropped to what it was for a 25-year bond just a few months ago.

Hayduk said they’re conservatively estimating an interest rate of roughly 3.75% on the bond.

“We’re still a year out or so,” Hayduk said.

For the average City taxpayer living in a home with a taxable value of $176,069 in 2023, this 21-year bond would cost an additional $332.83 for the first year or $27.74 more per month. It would cost the same taxpayer $331.07 on an average year or $27.59 more per month.

Without the bond, Valentine said the City has a tax rate of about 16.83 mills. If the bond were approved, he said that would bring the tax rate to slightly under 19 mills total, which he said is the average in the Grosse Pointes.