Alabama county files biggest municipal bankruptcy in history!

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By KELLY NOLAN

Jefferson County, Ala., which owes more than $3 billion on a failed sewer deal, filed Wednesday for what would be the largest municipal bankruptcy in U.S. history after a tentative rescue plan with creditors unraveled.
 Associated Press

The county, home to Alabama's biggest city, Birmingham, filed its Chapter 9 petition in U.S. Bankruptcy Court less than an hour after county commissioners voted 4-1 to do so. The document was signed by Commission President David Carrington.

WSJ's Kelly Nolan has details of Jefferson County, Alabama's bankruptcy filing, which followed its inability to pay $3 billion on a sewer deal. Photo: REUTERS/Marvin Gentry

"After over three years of diligent efforts toward regaining financial stability, the county has exhausted its options, and additional delays in resolving its financial crisis will further harm the county's prospects for recovery and future economic development," the resolution stated.

The petition stated that the county owed $3.136 billion in sewer debt, the result of soured bond financing. The bond dealings were also tainted by corruption, with several former county officials convicted of wrongdoing and sent to prison.

"There were a number of illegal acts in Jefferson County," said Jeff Esser, executive director of Government Finance Officers Association, who added that Jefferson County's filing would not signal a wave of municipal bankruptcies.

The county has also been hurt by the loss of an occupational tax that brought in 44% of its discretionary revenue. The state Supreme Court ruled the tax unconstitutional earlier this year, and the county has laid off hundreds of employees as a result.
http://online.wsj.com/article/SB10001424052970204224604577028491526654090.html
 

Jefferson County Commission

David Carrington (R)
(President - District 5)
Commissioner - Administrative Services

George Bowman (D)
(District 1)   
Commissioner - Health Services and General Services   
E-mail: bowmang@jccal.org
     

Commissioner Sandra Little Brown
Sandra Little Brown (D)
(President Pro Tempore - District 2)
Commissioner - Community Services
and Roads and Transportation
browns@jccal.org


Jimmie Stephens (R)
(District 3)
Commissioner - Finance and Information Technology
E-mail: stephensj@jccal.org


Joe Knight (R)
(District 4)
Commissioner - Courts, Emergency Management
and Land Planning and Development Services
knightjoe@jccal.org


                                                             

[ivanm]

Sewer bonds would normally be a safe venture because the users and the taxpayers service the debt.  Wow, these thugs are making gold out of fertilizer.

If it were Chicago I could understand it as that is business as usual for that jungle. 

[dustup]

Sewer bonds would normally be a safe venture because the users and the taxpayers service the debt.  Wow, these thugs are making gold out of fertilizer.

If it were Chicago I could understand it as that is business as usual for that jungle. 

Greed comes in all shapes and sizes and no location is exempt......America is crumbling under the weight of Greed.......

[ivanm]

Greed comes in all shapes and sizes and no location is exempt......America is crumbling under the weight of Greed.......

It seems to be that way.  It is very unfortunate because large expensive projects require long  term financing.  The tax exempt status of the interest on munis makes them more attractive to bond holders who are faced with high income taxes.  One must determine  the taxable equivalent rate for a muni when evaluating its competitive value against taxable investments.

For example, I own some munis that have a coupon rate of nearly 8 percent, and the income is not subject  to federal income tax.  An 8 percent bond would even be a good rate for a taxable bond these days.