BIRMINGHAM, Ala. - While Jefferson County continues to negotiate another extension to its forbearance agreements with creditors, the county is planning to hold its first public hearing Aug. 8 on how to deal with the $3.2 billion sewer debt crisis.
Bettye Fine Collins, the county commission president, suggested on Monday that the county could simply not make its payment related to the troubled sewer debt if the forbearance agreements are not extended. But she also said that an extension to existing forbearance agreements may be forthcoming, and reiterated the same thought yesterday.
"We haven't given up on another forbearance" agreement, she told reporters after a commission meeting yesterday. She noted that the county could not afford to make a pending $100 million payment that has been due for several months but delayed because of the forbearance agreements. The current forbearance agreements expire Thursday.
Meanwhile, Collins said a public hearing is being planned "so all points can be aired" about what the county faces either restructuring the troubled debt or considering a proposal involving bankruptcy suggested last week by the state's pension chief.
The time and location of the hearing have not been determined.
David Bronner, chief executive officer of Retirement Systems of Alabama, will be invited to give a presentation at the public hearing on his proposal suggesting that the county put the sewer system into bankruptcy so the RSA can purchase it - although under that scenario another private company could outbid the system.
Nonetheless, the RSA idea has split the county commission and gained widespread popularity with their constituents, although three commissioners - a majority - have rejected the idea that the county use bankruptcy to deal with the sewer debt crisis.
Collins said yesterday that Citi, one of three investment banks on Jefferson's underwriting team, will give the county's first presentation to the public about the proposal currently being discussed on Wall Street.
There also will be an informative presentation on bankruptcy so everyone understands what it involves, Collins stressed.
"We have a job ahead of us to get everybody up to speed," she said.
Alabama Gov. Bob Riley has indicated that he wants unanimous backing of the commission as well as the area's legislative delegation before he will consider calling a special session of the state Legislature to consider the county's financial predicament. There are indications that even the legislative delegation is split on the solution here.
Parts of the proposal to restructure the debt, which was unveiled to the county's Wall Street creditors last week, require legislative approval as well as approval in a statewide referendum. To get a referendum on the November ballot, requires county commission action by Sept. 15.
Collins believes all the required actions can be achieved by the deadline "if we have the governor's cooperation and he believes we can work this out."
There may not be unanimous buy-in on the proposal from elected officials, Collins said, adding that she hopes the governor will accept a majority recommendation if it comes to that.
Rep. Roderick Scott, a Democrat from the city of Fairfield in Jefferson County, chimed in on the debate yesterday, saying he did not believe supporters of bankruptcy understood that even if bond insurers step in to pay bondholders, Jefferson County still must pay back the sewer debt.
Scott's remarks were in response to Bronner's proposal.
Bronner said the pension system would consider offering as much as $2 billion for the sewer system, leaving bondholders to seek recompense from bond insurers for payment on the remaining debt.
"Will we allow the RSA or any other entity to benefit off the backs of Jefferson County citizens?" Scott said. "Or will we face this challenge?"
On Thursday, county commissioners will meet in regular session and consider adding three new members to the underwriting team: Grigsby & Associates Inc., Kipling Jones& Co., and SBK-Brooks Investment Corp. Along with Citi, the county's underwriting team currently includes Sterne Agee & LeachInc. and Morgan Keegan& Co.
