Jefferson County sewer debt

Birmingham Business Journal

Jefferson County has emerged from one the largest municipal bankruptcies in U.S. history. After two years of meeting with creditors and countless days in court the county commission can operate with more ease. But how did they get to this point? Alabama Public Radio’s Ryan Vasquez talked with Brian Hilson who is President and CEO of the Birmingham Business Alliance about his organization's involvement in helping Jefferson County emerge from bankruptcy and what's next.

Jefferson County has closed the sale of nearly $1.8 billion in new debt and emerged from the nation's second largest municipal bankruptcy.

Jefferson County Commission President David Carrington said the paperwork on the new debt was signed Tuesday. Commissioner Jimmy Stephens said a great weight has been lifted.

A federal judge has approved Jefferson County's plan to exit the second-largest municipal bankruptcy in U.S. history.

Bankruptcy Court Judge Thomas Bennett said Thursday he's approving the county's plan to cut and refinance its debt.

The county filed for bankruptcy in November 2011, citing more than $4 billion in debt. It was the nation's largest municipal bankruptcy until Detroit filed this year for $18 billion.

The bulk of Jefferson County's debt was more than $3 billion from sewer construction.

The effort to sell $1.7 billion in refinanced Jefferson County sewer warrants begins this week with presentations by local officials in Birmingham and New York.

Jefferson County Commissioner Jimmie Stephens says the milestone means that the county "is alive and well and beginning to kick again."

The presentations come one week after the Jefferson County Commission approved modified deals with sewer creditors. The county's path to exit Chapter 9 bankruptcy relies on the sale of new sewer system warrants to replace soured debt.

Attorneys for Jefferson County have filed a 101-page plan to exit the largest municipal bankruptcy in American history.

The plan calls for cutting the county's $4.2 billion debt by more than $1.2 billion and raising sewer rates annually by 7.41 percent for four years. Rates would rise by 3.49 percent annually for an undetermined amount of years after that.

The plan must be approved by Thomas Bennett, U.S. Bankruptcy Judge for the Northern District of Alabama. / Jefferson County Commission

Jefferson County commissioners have approved a plan to exit the largest municipal bankruptcy in U.S. history.

The panel approved the plan on a 4-1 vote Thursday. It's due to be filed with a federal judge Sunday.

Most of the $4.2 billion debt stems from bonds that funded sewer system repairs, and the plan includes sewer fee hikes of 7.4 percent for four years and 3.4 percent for 40 years.

Commissioner George Bowman opposed the plan, which he says puts too much of a burden on people in his district.

Jefferson County Manager Tony Petelos was among the first witnesses called as a hearing began before a bankruptcy judge.

The hearing this week is aimed at determining whether county sewer bondholders will be allowed to go back to state court to force higher sewer rates.

The hearing before Chief U.S. Bankruptcy Court Judge Thomas Bennett deals with motions by The Bank of New York Mellon and other creditors that ask him to lift the automatic-stay on legal action against the bankrupt county.

The Birmingham News

This could be an important week in Jefferson County's attempt to emerge from the largest municipal bankruptcy in U.S. history. ( ) reports that the county commission president and another commissioner will be in New York for meetings with hedge fund managers as they try to negotiate a deal.

On Wednesday, a federal bankruptcy judge in Birmingham will begin a hearing on a request by creditors who want to go to state court seeking rate increases for sewer service in Jefferson County.