BRADENTON, Fla.- The Jefferson County Commission yesterday approved a resolution asking Alabama Gov. Bob Riley to call a special session of the Legislature to consider the county's sewer debt restructuring plan.
Commissioners also confirmed a vote taken on Friday agreeing to pay $44 million for forbearance agreements with creditors, a ratification required under the county's operating procedures.
Votes for the resolution seeking a special legislative session and approving the forbearance agreements were 3 to 2, and represent milestones in the county's push to avoid bankruptcy.
The county last Thursday released details of a plan to restructure $3.2 billion of troubled variable- and auction-rate debt using several funding streams that require legislative approval, and ultimately a statewide referendum to amend the state constitution.
"The next thing that we're doing is we're meeting individually and collectively with our state [legislative] delegation and we're explaining the details of the plan going forward, and we're asking that they use their influence with the governor on the need to call a special session so it will give us a chance to save the county and it will give us a chance to solve the problem," said Commissioner George Bowman, who is working with the county's negotiating team.
In a five-page resolution recounting the difficulties the county has encountered with its troubled sewer debt, the County Commission said it has "no desire to seek protection for the county from its creditors under Chapter 9 of the Federal Bankruptcy Act or of using the federal bankruptcy jurisdiction to rearrange its sewer debt to the disadvantage of its creditors."
The resolution also refers to the recently unveiled restructuring plan and asks the governor to convene a special session between Aug. 11 and 18 to consider that plan.
The timing is critical because some of the proposed funding streams to restructure the sewer debt will require either a change in state law or a constitutional amendment. Action must be taken by Sept. 15 to place a constitutional amendment on the ballot for a statewide vote in the November general election.
Bowman said approval of the resolution seeking a special session was one of several milestones creditors set in the forbearance agreements, which represented the fourth delay in accelerated repayment of the sewer system's variable-rate debt and delays in making payments on out-of-synch swaps.
"The next [milestone] is getting a favorable passage of the plan out of the Legislature and getting it placed on the ballot for the upcoming election," he said. "All these things are doable if we can just have our day in the Legislature."
In addition to the $44 million Jefferson County paid as part of the forbearance agreement extension, Syncora Guarantee Inc., formerly known as XL Capital Assurance Inc., also made a $35 million claim payment as part of its agreement with the county to insure the sewer bonds.
"Syncora Guarantee remains committed to honoring the terms of the financial guarantee it provides to Jefferson County's bondholders," said a statement by Syncora president Edward Hubbard released late Monday.
As of June 30, Syncora's exposure to Jefferson County was $809 million.
The restructuring plan "represents a significant step in the right direction, if the county proceeds with its implementation," Hubbard said. "We expect the county to work closely with its financial advisers and creditors and make progress in the months ahead."