Monday, January 4, 2016

GLWA Takes the Reins

As of the first of the year, the Great Lakes Water Authority (GLWA) now manages water and sewer service for most of metropolitan Detroit. It succeeds the Detroit Water & Sewerage Department (DWSD), which becomes a wholesale service purchaser from GLWA and retail distributor exclusively to the city itself, designated DWSD-R (R for Retail).
Norb Franz of the Macomb Daily wrote on December 31, 2015 that Brian Baker, finance director for the city of Sterling Heights and Macomb County’s representative on the GLWA board  “...predicts the impact on suburban wallets will be significant.”

Franz reports further:

Baker claims that half of the annual lease payments [$50 million per year from GLWA to the City of Detroit] will be used to subsidize Detroit to help the city fund its pension system and to cover Detroit’s water and sewer users who don’t pay their utility bill.

Pointing out that Sterling Heights, like other suburban communities, is on the hook for the amount billed, Baker said Detroit “will only pay what they collect.”

“We thought that was a fundamental problem in the start-up of the regional authority,” Baker said in an interview with a committee of The Macomb Daily news staff. “I don’t want to make this ‘Detroit versus the suburbs’ ... they certainly are trying to do a better job, but it’s an issue.”

I don’t recall Detroit media mentioning this provision in the lead-up to a deal.

In recent developments concerning finance, GLWA formally assumed all liabilities of the water and sewer systems, including indebtedness.

Two-thirds of DWSD’s bondholders approved the transition from DWSD to GLWA.

The three major bond rating organizations upgraded DWSD/GLWA’s credit rating.

DWSD/GLWA refinanced some of its debt at a better interest rate, purportedly saving $38 million long-term.

Management adjustments included DWSD’s executive director, Sue McCormick, being appointed to the same position at GLWA.

McCormick was replaced at the reorganized DWSD by Gary Brown, a City of Detroit group executive and GLWA board member. Palencia Mobley was named DWSD’s deputy director and chief engineer.

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