CHICAGO - The regional authority takeover of Detroit's Water and Sewerage Department should be a positive for holders of existing DWSD debt, Moody's Investors Service said Oct. 10.
The Great Lakes Regional Water Authority has received final approval from the three counties that will run the authority along with Detroit.
"The regional authority may result in greater legal separation from the city, a positive for existing creditors of DWSD because the authority may potentially isolate creditors from the risk of a future bankruptcy filing by the city," Moody's analysts said.
Moody's also said it exists no major changes in operations and that the new authority would not impact the credit of Macomb, Wayne, or Oakland Counties.
But the new authority will have some exposure to Detroit's credit weakness, as the city is expected to become its largest wholesale customer, Moody's said.
Separately, Detroit Mayor Mike Duggan put out a statement Friday applauding the county boards for their approval of the deal.
"Forty years of division over control of our regional water and sewer system has ended," Duggan said. "The fact that the legislative bodies of the City of Detroit and all three counties have approved the creation of the Great Lakes Regional Water Authority shows the new sense of cooperation and partnership that exists between our city and its suburban neighbors.
The new authority will be run by a six-member board made up of two Detroit mayoral appointees, one appointee from each county, and one appointee of the governor. Major decisions on issues like contracts or future privatization will require five out of six votes.
