IRON MOUNTAIN — A funding offer for a $13.3 million water project will be accepted by the city of Iron Mountain as officials look to get financing as well for $6 million in accompanying sewer work.

The water project approved Monday by the city council includes a $10.64 million loan at 2% interest from Michigan’s Drinking Water State Revolving Fund, plus a $2.666 million grant from the same source. The work involves water main and service line replacements chiefly in the areas of West A, West Hughitt and East C streets, along with an area near Walker and Fairbanks streets.

Replacing the sewer infrastructure as well while streets are torn up for the water project would be ideal, City Manager Jordan Stanchina said.

Funding for the $6 million sewer portion would likely come from a low-interest USDA Rural Development loan, or possibly commercial lending.

Rural Development has a lengthy application process and funding eligibility won’t be known until spring, Stanchina said. This creates an issue that needs more discussion, because engineering for the sewer work will be well in excess of $100,000, he said.

Stanchina, who has consulted with Rural Development, plans to meet soon with the city’s infrastructure committee and Coleman Engineering officials to discuss options.

Under terms of the DWSRF loan administered through the Michigan Department of Environment, Great Lakes and Energy, the water project could be done on its own. However, it makes little sense to ignore sewer lines that in some cases date back 100 years or more, Stanchina said.

Only the sewer portion would likely require a significant rate increase, as the city has an existing water bond that will be paid off in less than three years. If the council chooses a 40-year term for the 2% DWSRF loan, the annual payment would be about $389,000.

The water bond will be paid off in March 2027, freeing up about $305,000 annually just as loan payments would begin for the new project, Stanchina explained.

Efforts to get sewer assistance through the state’s Clean Water State Revolving Fund have been unsuccessful and city officials had hoped for a larger water grant. Nonetheless, the council voted unanimously Monday to accept EGLE’s offer.

Although Iron Mountain’s water and sewer charges have gone up in recent budgets, they remain on the lower end in the Upper Peninsula, according to a 2022 state survey. In addition to the approved project, other work is planned or occurring.

About 375 lead service lines will be replaced at Iron Mountain homes over the next two years by Ultra Construction Services of Marquette through a $4.57 million project that started this fall. Funding is from the DWSRF, consisting of a $2.33 million loan at 2% interest, plus a $2.24 million grant.

Changes to the Michigan Safe Drinking Water Act approved in 2018 require the city to replace all galvanized water services that are considered lead lines within the next 18 years. The city is committing $450,000 annually to meet the state standard, while the cost of the project underway is about $112,000 annually, Stanchina said. Coleman, of Iron Mountain, is the project supervisor.

Coleman is also the engineer for a $596,000 project that will help the city identify service lines containing lead as it prepares to replace them. It’s funded through a Technical, Managerial and Financial Support for Lead Service Line Replacement grant administered by EGLE, with no match required.

In all, Stanchina said, about 800 of the city’s lead service lines could be replaced through the combined projects. The total number needing replacement is estimated at 1,800, or possibly less, he said.

“This will give up a big jump start,” he said.