Detroit Ordered to Disclose Details of Plan of Adjustment to Water and Sewer Bond Holders

Earlier today [12/31], the Judicial Mediator in Detroit's Chapter 9 bankruptcy case, Judge Gerald Rosen, ordered Detroit's Emergency Manager to disclose to bond holders the details of the City's plan to convert DWSD into a regional authority.  Specific details of the City's plan have thus far been kept secret.

In a two-page order, Judge Rosen ordered the City of Detroit to disclose to water and sewer bond holders by the close of business on Thursday, January 2, 2014 detailed information including the following:

1. The amount that the City expects to receive if the water and/or sewer systems are leased, sold, or transferred, including a summary of how those amounts will be paid.
2. Payment terms, including interest rate, treatment of existing call provisions, and any proposed make whole provisions. and how the payments will be treated relative to the bond payments.
3. The amount of legacy pension, other post-employment benefits (OPEB) and certificate of participation (COP) liabilities the City intends to assess to the water and sewer systems under all potential approaches being addressed by the plan including, without limitation, those being assumed by the City as part of the lease/transfer payment, those being assumed by the lessee/transferee, and those being assessed to the water and sewer systems as operating and maintenance (O & M) expenses if the City retains the water and sewer systems.

Judge Rosen has also scheduled two mediation sessions in New York with bond holders for January 6 and January 7, 2014.

Thus far, the specific details of the Emergency Manager's plan for regional authority have been confidential, and shared only with the suburban counties  that would comprise the new regional authority and their advisers. The general outline of the EM's plan, however, is not a secret and follows the plan first adopted by the Board of Water Commissioners on March 13, 2013.

Under the proposed "Metropolitan Area Water and Sewer Authority," the City would either lease the assets of the DWSD system to the authority for up to 40 years, sell it to the newly created body, or operate under a concession agreement. The authority would collect water bill payments and pay the City a monthly fee. How much of a fee, of course, is one of the major sticking points.

A self-imposed December 20th deadline for reaching a deal with Wayne, Oakland and Macomb Counties passed without a deal.

For more about DWSD Update, click here.

Update (1/2): As of 5:20 p.m. today, no documentation related to the Plan of Adjustment had been filed with the bankruptcy court. Judge Rosen did not specifically order that the City file its information with the Court, but I thought there might be a proof of service indicating compliance with the Court's order.