Jefferson Commission's Latest Member to Vote on Swap Forbearance

BRADENTON, Fla. - The Jefferson County, Ala., Commission today welcomes a new Democrat to the dais who will be asked, as part of his first day of voting, to approve swap forbearance agreements delaying payments until Dec. 8.

Birmingham City Council member William Bell, who won the County Commission seat Nov. 4 in an uncontested election, has said he favors delaying payments to give the county more time to work out a restructuring agreement on $3.2 billion of troubled sewer debt. Bell replaces another Democrat, George Bowman.

The swaps, on which Jefferson owes more than $400 million, cover the sewer debt that is mostly in variable- and auction-rate securities. Counterparties, including JPMorgan, have agreed as part of a sewer restructuring plan to forgive swap termination payments.

But the plan, negotiated by Alabama Gov. Bob Riley, has never been voted on by commissioners. At last report, they still had not found $26 million in extra revenue needed to make the restructuring viable.

After Bell is sworn into office today, County Commission President Bettye Fine Collins, a Republican, plans to propose a reorganization of the commission that would name Bell as president pro tem and assign him to oversee three county departments - community, economic, and workforce development - that are currently held by her fellow Republican commissioner Jim Carns.

Collins would remain president of the commission if her plan is supported by Bell and fellow Democrat Shelia Smoot.

Collins, Smoot, and formerly Bowman had become a bipartisan voting block against a Chapter 9 bankruptcy to deal with the financial crisis created by the sewer debt. Carns and fellow Republican Bobby Humphryes favor bankruptcy to deal with the problem.

"I'm just not in any rush to declare bankruptcy before I and the rest of the commission have taken the opportunity to look at some options that we haven't looked at," Bell told the Birmingham News on Oct. 26. "It has to involve some of the people with the deep pockets and those are the banks. I've said all along that the county should take some type of legal action in this matter."

If the swap forbearances are approved today, that would place their expirations in synch with the Dec. 8 expiration of forbearance agreements delaying some sewer debt payments.

Meanwhile, a hearing is scheduled Monday in Birmingham federal court on whether a receiver will be appointed to take over the sewer system.

The two main insurers of the sewer debt, Financial Guaranty Insurance Co. and Syncora Guarantee Inc., want the system placed in receivership. They claim, among other things, that Jefferson County failed to increase rates to pay debt service as required by bond covenants.

For reprint and licensing requests for this article, click here.
Bankruptcy
MORE FROM BOND BUYER