The Sewerage & Water Board may issue as much as $17 million in bonds to refinance old debt, the New Orleans City Council decided Thursday.

The council voted 6-0, with Councilman James Gray absent, to grant the water board’s request to refinance up to $17 million in drainage system bonds, with the proceeds going to pay for capital projects related to improving the city’s drainage system.

The board’s deputy executive director, Robert Miller, said the agency will go to the bond market later this month or early next month to refinance about $16.2 million in bonds. The move is expected to result in present-value savings of about $1.4 million on the board’s debt service payments, he said.

The savings will be used to make repairs to the city’s major drainage system, or pipes that are more than 36 inches wide, Miller said.

The bond sale is part of a strategy the water board intends to employ to leverage the increased revenue it is generating from higher rates that were enacted in 2012 to support bonds to pay for infrastructure improvements.

The board’s staff has estimated the cost of all needed repairs to the system’s old and failure-prone water and sewer pipes, power and water-treatment plants, drainage canals and other facilities at $3.5 billion.

The board is expected to generate an additional $583 million through a rate increase the council approved in 2012 that will hike customers’ bills by 10 percent each year through 2020.

The bonds will pay a maximum interest rate of 5.5 percent, though the exact terms of the sale won’t be known until later.

The Board of Liquidation, City Debt, will need to approve the terms of the bond sale.