Garrett Neese/Daily Mining Gazette Houghton City Manager Eric Waara talks during a budget work session in April.

HOUGHTON — The Houghton City Council approved a series of payments and other resolutions regarding water and sewer improvements in the city Wednesday.

The council approved issuing $1.24 million in 20-year bonds for Phase 3 water work, and $326,000 for Phase 3 sewer work, in what City Manager Eric Waara said is a final step before closing a loan agreement with USDA Rural Development for the project. The phase 3 work is being done as part of the reconstruction of Townsend Drive and College Avenue, which began earlier this month.

The city had less need to issue bonds for the sewer work due to $974,000 in grants. The city qualified for a sewer grant based on a Rural Development review of the city’s sewer rates, City Manager Eric Waara said.

The loan resolutions were developed by Rural Development, and are a required step before the closing process. The amount of the water loan was decreased after bidding by $360,000, while the interest rate also dropped from 1.75% to 1.625%, said Jim Koskiniemi of U.P. Engineers & Architects.

With the bonds approved, the council approved payments from the first drawdown of the loans: $124,302.11 for water, $116,901.87 for sewer. The costs included filing fees, city expenses and design fees.

The council also passed a resolution concurring with the state award of the bid for phase 3 work to Bacco Construction, which had the sole bid at $9,610,285.08.

Payment requests were also approved for Phase 2 of the city’s water and sewer project. The council approved $262,126.88 for water in the 12th round of draw requests, and $68,151.05 for the 10th round of sewer payments.

The council also approved an amendment to the recently approved bond agreement for the city’s pier project. As the project was not approved until this year, a year later than planned, the term of the 20-year bond was also changed to begin this year.

Another revised agreement approved by the council was for mortgages for 510 and 515 Shelden Avenue. The upstairs portions of the two downtown properties are being rehabilitated for rental housing through a Michigan Economic Development Corp. program. 510 Shelden is the former Lode Theater building, while 515 now houses Vinyl Truth.

The apartments upstairs of that building have been unused, I think, as long as anybody can remember,” Waara said of 515 Shelden. “And this project would rehabilitate those apartments and get them back into our housing stock.”

The agreement reached in February required the developer to put up 100% of matching funds as escrow, Waara said in a memo to the council. In the revised agreement, the owner places partial escrow ahead of expenses, and the grant is secured with a mortgage against the property until the grant conditions are met.