The Great Lakes Water Authority is now more or less a done deal.
The final big hurdle was to get current Detroit Water and Sewerage Department bondholders to agree to transfer more than $5 billion in debt to the new Authority.
A majority did agree to that this week.
That’s key because the GLWA, which emerged from Detroit’s bankruptcy, is one of two entities being “spun off” from DWSD—and the one that will assume its debt load.
Nicolette Bateson, currently serving as both the DWSD and GLWA’s chief financial officer, said the spinoff is seen as a positive for bondholders, because it insulates them from the city of Detroit’s finances.
“The Great Lakes Water Authority is a separate legal entity,” said Bateson. “The other [entity] is the restructured Detroit system, focusing on the local system needs within the city of Detroit.”
The GLWA will rent and operate the current DWSD’s drinking water and wastewater treatment plants, as well as its infrastructure outside city limits, for $50 million a year. The new “retail” DWSD will manage and operate the infrastructure within Detroit city limits.
A successful $324 million DWSD bond refinancing this week proves there’s “real indicator of investor interest and support in moving forward,” says Bateson.
“It was quite a good week for both DWSD and GLWA.”
Though some final loose ends need to be tied up, the GLWA is on track to officially launch on January 1, 2016.