Judge Steven Rhodes today approved the city’s plan to refinance $1.5 billion of its water department debt.
Earlier this month, the city announced a tentative agreement with creditors for the Detroit Water and Sewerage Department. The deal would allow for the refinancing of long-term debt because the city would buy back and then re-issue bonds. Since then, several bondholders have accepted the new terms. About $1.5 billion worth of water department debt will be re-financed at a lower interest rate under the plan.
Emergency Manager Kevyn Orr testified today that the deal saves the water department more than $ 11 million annually on debt service for about two decades. It also means several creditors will no longer object to the city’s financial restructuring plan because their bonds are not impaired as part of the settlement, which will help confirmation of the city’s Plan of Adjustment when the trial begins Sept. 2.
Here’s a timeline of how the DWSD deal unfolded:
Aug. 6: The Detroit Water and Sewerage Department approved a deal to allow the re-financing of about $5.2 billion in debt. After weeks of confidential mediation sessions, the city and its water department bond holders and insurers reached the agreement. It allows the city to buy back existing bonds and then re-sell them at a lower rate to pay off old debt. Commissioners for the Detroit Water and Sewerage Department say the deal will save customers money and reduce some operating costs for the department.
More on that announcement here.
Aug. 7: DWSD invites holders of water supply system bonds and sewage disposal system bonds to tender their bonds.
Aug. 12: The Michigan Finance Authority passed a resolution approving financing for the bonds if the tender went through.
Aug. 13: The Detroit Board of Water Commissioners authorized the terms of the new funding for bonds.
Aug. 14: Detroit’s Emergency Manager Kevyn Orr issued an order that ratified the Board of Water Commissioners resolutions. The Detroit City Council approved the re-financing deal.
Aug. 19: The Michigan Department of Treasury authorized the bonds.
Aug. 22: The Detroit Board of Water Commissioners accepted the bonds that had been tendered. The Emergency Manager approved and ratified the board’s order.
Aug. 25: City attorneys argue to Judge Rhodes in favor of the agreement, which he approved.