A team of Kutak Rock attorneys, led by Debbie Sinclair Ruskin of the firm’s Washington D.C. office and assisted on bankruptcy matters by Bruce Wilson and Tom Roubidoux of the Omaha office, served as counsel to a bond purchaser, structuring a financing transaction in connection with the $60 million private placement of City of Detroit (City) Public Lighting Authority Revenue Bonds. The bonds were issued through the Michigan Finance Authority to fund repairs and upgrades to the City’s streetlight system. The transaction was structured as a § 364 post-petition financing in the City of Detroit’s Chapter 9 bankruptcy case.
As described by the U.S. Department of Energy, persistent lack of funds, staff reductions and the continuing deterioration of an already antiquated lighting system due to inadequate maintenance, made worse by a growing copper and transformer theft problem, had left the City with almost half of its 88,000 streetlights no longer operating by the time the City filed for bankruptcy protection in July 2013. Availing itself of recent Michigan legislation, the Public Lighting Authority of Detroit (Lighting Authority) devised a plan to re-illuminate the city.
Kutak Rock's work as counsel helped a major bank act as the initial bond purchaser, with the bank acquiring the first $60 million in bonds using the bank’s own capital. As interest on the part of the public finance marketplace increased, other investors ultimately became involved, with $185 million of bonds eventually issued by the Michigan Finance Authority on behalf of the Lighting Authority to fully fund the repair and upgrade of the City’s streetlight system.
On December 15, 2016 the Lighting Authority announced the completion of the “relighting of Detroit,” having replaced 88,000 poorly working or burned out streetlights across the City with 65,000 new LED lights, representing an increase of 15,000 lights over the City’s original design target of 50,000. In addition to improving public safety and increasing commerce by repairing poor or nonexistent public lighting, the new system will save millions in electric bills. According to the Lighting Authority, the new LED technology, working in tandem with the Lighting Authority’s revamped maintenance program, means that a streetlight that stops working is repaired within 3 to 5 days after the outage is reported instead of the months, if not years, that residents used to wait before the upgrade.
The new streetlights have had an immediate positive impact on neighborhoods and businesses and have been credited with gradually bringing the City back to life.