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Posted on Tue, Mar 6, 2012 : 5:55 p.m.

Ann Arbor City Council approves $120M bond issuance for wastewater plant renovations

By Ryan J. Stanton

Major renovations to the city of Ann Arbor's Wastewater Treatment Plant are about to get under way and city officials are lining up financing for the project.

The City Council voted unanimously at first reading Monday night to authorize the issuance and sale of up to $120 million in revenue bonds.


Matt Horning

City Treasurer Matt Horning said the bonds are to be sold directly to the Michigan Finance Authority as part of the state's Water Pollution Control Revolving Fund Program.

The bonds are to be issued in two series, Horning said, with the first series scheduled to be issued April 10 in the principal amount of $37 million to finance the first phase.

The second series is scheduled to be issued in the first half of calendar year 2013.

Horning said the bonds will bear interest at rates substantially lower than market rates (2.5 percent for the first series) and will mature in annual principal installments from 2017 through 2037.

The bonds will be secured by and payable solely from the net revenues of the sewage disposal system, Horning said.

The city's bond counsel, Dykema Gossett PLLC, prepared the documents the council signed off on Monday night.

Ryan J. Stanton covers government and politics for Reach him at or 734-623-2529. You also can follow him on Twitter or subscribe to's email newsletters.



Wed, Mar 7, 2012 : 3:33 p.m.

Are we also correct in assuming that this bond includes about $1.2 MM to be borrowed with interest and deposited in the public art fund? A fund that already has close to $2 MM in cash not allocated for any particular use? Should we expect to see a thoughtless spending frenzy that will "demonstrate" this fund is very important?


Thu, Mar 8, 2012 : 2:55 a.m.

Obviously, you understand how Ann Arbor's dysfunctional government works.


Wed, Mar 7, 2012 : 3:14 p.m.

Servicing of the initial $37 million bond issue with a coupon rate of 2.5% will cost $925,000 a year from 2013 through 2016. Then, beginning in 2017 when principle repayment begins, the cost will rise to $2.775 million before gradually declining year-after-year until the debt is extinguished in 2037 (assuming amortization). The revenue to pay for servicing the bond will mean either increased sewer water treatment fees or a millage. Of course, after 2013 city taxpayers will have to finance another $83 million bond issue, which, if scheduled similarly to the first bond issue, will cost taxpayers an additional $2.075 million dollars a year from 2013 through 2017 and then an additional $4.15 million principle pay down per year from 2018 through 2038. The largest bond servicing cost will be in 2018 when taxpayers must provide a total of $9.925 million which will then gradually decrease annually over the remaining 19 and 20 year lifespans of the two bond issues. Get prepared to open your wallets. I hope that Ann Arbor taxpayers are getting their money's worth. No padding, please!

Craig Lounsbury

Wed, Mar 7, 2012 : 1:13 p.m.

at least city council is addressing a core function for a change. That's refreshing to read. But why are they fixing it? Why not use the Fire/police model of fiscal "responsibility"? Just lay off 1/2 the employees and treat less water. ;)


Wed, Mar 7, 2012 : 11:39 a.m.

Money saving tip for A2 officials: Stop practicing medicine without a licence and leave the spigot for the systemic poison and industrial waste product, sodium silicofluoride, out of the renovations. Save money and stop assaulting citizens' health. Definitive research is in and contradicts "Public Health" proclamations.

Brian Kuehn

Wed, Mar 7, 2012 : 12:52 a.m.

Dog Guy has a point. For some time now we have been told that the City was accumulating a war chest in the Water Department for this large project. Perhaps there is a good reason why we would borrow the funds rather than use some of the accumulated surplus. Anyone able to explain this process for the rest of us? I have not reviewed the financial statements so maybe the surplus is a lot less than the $91,000,000 mentioned by Dog Guy.

Brian Kuehn

Wed, Mar 7, 2012 : 1 a.m.

In checking the 2011 Financial Statement, it looks like the Sewage Treatment fund has only $25,000,000 of unrestricted funds. On that basis, borrowing at that low interest rate makes sense.

Dog Guy

Tue, Mar 6, 2012 : 11:48 p.m.

Step right up and indicate the shell under which resides the $91,000,000.00 already saved up for this project from confiscatory water rates and fees. You can't win if you don't play, so step right up. (Actually, that much money requires a bucket to hide.)