Great Lakes Water Authority - Departments and · PDF file2 DWSD MEDIATION PROCESS ! Initial...
Transcript of Great Lakes Water Authority - Departments and · PDF file2 DWSD MEDIATION PROCESS ! Initial...
2
DWSD MEDIATION PROCESS
§ Initial Authority discussions failed - Based on “monetizing” DWSD assets / revenues to benefit of City of Detroit
General Fund creditors
§ April 2014 Judge Cox resumes DWSD mediation
§ Agreement that lease payment will “stay in the system” for City of Detroit local system or Detroit share of common costs
§ Finance Working Group determination of feasibility of $50 million “control premium” in form of lease payment
§ Memorandum of Understanding / Articles of Incorporation drafted for execution by Principals of counties and City of Detroit - Pending affirmation by respective local government governing boards - Multi-track implementation planning process pending
3
§ Governance § Lease § Key Financial Terms § O&M of Detroit and Other Local Systems § Capital Improvements § Treatment of Existing Contracts § Evaluation and Transitional/Transactional Costs § Management of the System for Benefit of Customers § Termination of Authority or Withdrawal from Membership § Conditions Precedent to Transfer § Statement Regarding State Commitments
MEMORANDUM OF UNDERSTANDING OUTLINE
4
GLWA GOVERNANCE
- Adoption of a procurement policy - Approval of a lease of the Systems - Removal of any Board member for
cause.
1 Vo%ng Board Member
1 Vo%ng Board Member
2 Vo%ng Board Members
1 Vo%ng Board Member
1* Vo%ng Board Member
- Appointment of General Manager - Approval of rates and rate-setting protocols - Issuance of debt - Annual approval of a rolling 5-Year CIP
§ Board appointed to 4-year terms serving “at will” - Minimum education and experience requirements; compensation determined by Board
§ Supermajority (5/6) voting requirements for:
5
GLWA LEASE & KEY FINANCIAL TERMS
Lease of DWSD Assets § $50 million per year payments a
“common to all” revenue requirement
§ Held in separate Authority fund used at City’s discretion for: - Detroit local infrastructure
improvements - Detroit share of common to all
debt service or debt service for Detroit local improvement
Key Financial Terms § GLWA has no taxing power § Incorporating municipalities / GLWA
finances separate § MFA available to Authority § “Common to All” rate structure includes: - Lease payment ($50M) - $4.5M ratepayer assistance for all retail
users in GLWA system - “Frozen” $26M recognitions of City
ownership § Open, transparent financial reporting - Pension liabilities limited per Bankruptcy,
monitored § Assumes annual revenue
requirement increases of no more than 4% for each system
6
OPERATION AND MANAGEMENT OF DETROIT AND OTHER LOCAL SYSTEMS /
§ City has right to continue to operate and retain employees for the local system in Detroit including to deliver - Capital improvements - Billing and collection system - City to implement water loss practices
§ City may contract for selected operations & capital program delivery - With GLWA - With other service providers
7
CAPITAL IMPROVEMENTS / EXISTING CONTRACTS
Existing Contracts § The City will assign all
customer (wholesale) contracts to GLWA
§ GLWA a successor employer to DWSD. Collective Bargaining Agreements (CBAs) assured
§ Existing DWSD vendor contracts assigned to GLWA
Capital Improvements § State agreement to
facilitate access to State administered financing
§ City of Detroit determines priorities for dispensing local system improvement funds
8
IMPLEMENTATION COSTS / MANAGEMENT OF THE REGIONAL SYSTEM
Implementation Costs § State agrees to give priority
consideration to a CGAP grant application to assist with payment of transactional costs
§ Veolia to undertake Peer Review of System - No commitment to Veolia for
contract operations - GLWA may adopt ideas or
recommendations and may engage Veolia selectively
System Management § GLWA to adopt regional
perspective in water and sewer system management - Revise Master Planning
§ Best efforts to optimize use of system capacities - Objective to become provider of
choice in southeast Michigan - Consider incentives to utilize
system capacities
9
TERMINATION, CONDITIONS PRECEDENT & STATE COMMITMENT
§ Termination - Incorporating Municipalities may terminate but remain liable for all
contractual obligations to GLWA. Governor appoints replacement member. City foregoes lease payment if it terminates.
§ Conditions Precedent to Transfer - Incorporating Municipalities adopt MOU / Articles of Incorporation - GLWA and City have negotiated (1) lease agreement, (2) agreements
relating to operation of Detroit local system and (3) transitional services agreement
- GLWA and City of Detroit have secured necessary permits for systems - City receives approvals under PA 436 and Plan of Adjustment confirmed - City receives bondholder and credit enhancer consent
§ State Commitment - Facilitate transaction, transfer of permits, and grant / loan funding
10
SUMMARY OF REVENUES AND REVENUE REQUIREMENTS ($ MILLIONS) *
* All figures (prior to Lease Payment) reflect combined Water and Sewer figures as reflected in Series 2014 Bond Disclosure
** Note that the Lease Payment stays “within the System” and is used to fund capital improvements that would have been System revenue requirements in some form and at some point in time
11
FORECASTED UNRESTRICTED CASH VS. LEASE PAYMENT ($ MILLIONS) *
0
20
40
60
80
100
120
140
160
2015 2016 2017 2018 2019
Unrestricted Cash
Lease Payment
* Unrestricted Cash figures reflect combined Water and Sewer totals from Series 2014 Bond Disclosure