Earlier today, at a closed-door meeting with about 150 banks, bondholders, unions and pension funds, Detroit's Emergency Manager, Kevyn Orr, outlined his plan to restructure the City of Detroit's massive debt.
As part of the plan presented to creditors, the EM outlined a plan to convert DWSD into a regional water authority that followed the Plan of Action proposed by the Root Cause Committee, and adopted by the Board of Water Commissioners on March 13, 2013.
The EM proposes creating a new authority called the Metropolitan Area Water and Sewer Authority (MAWSA), which would operate as a standalone public authority. The City would permit the new authority to operate the DWSD assets through a concession agreement or lease agreement.
Note: The report presented to creditors by the EM can be found here. The portions relevant to DWSD are at pages 37-38, 83-86, and 101-102.
For more about DWSD Update, click here.
As the City of Detroit veers closer to Chapter 9 bankruptcy, and news reports suggest that creditors will be offered pennies on the dollar by the EM, the recent experience in Jefferson County (AL) may be a template for Detroit. Bloomberg News reported earlier this week (here) on a deal between Jefferson County and its creditors, most of whom held sewer system debt, to recover approximately $0.60 on the dollar.
Compared to the $0.10 on the dollar being floated in Detroit, Jefferson County creditors might have made a good deal. Or maybe the figures being floated in Detroit are designed to soften up bond holders for what promises to be a difficult negotiation process.
For more about DWSD Update, click here.
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