BRADENTON, Fla. — Jefferson County, Ala., is negotiating with a local bank to obtain a bridge loan in order to put an unknown number of county workers back on the payroll.
County Commission President Bettye Fine Collins said Wednesday during a meeting that the county is seeking the loan from Regions Bank, which is headquartered in Birmingham, the county seat. She did not specify the amount sought.
Regions acknowledged that the bank is discussing terms of a bridge loan “that the county hopes will allow employees to return to work and reestablish vital services,” the bank said in a statement. “We feel this course of action best serves the interests of our community.”
The county laid off about 1,000 workers last month after losing about one-third of the revenue for its general fund from an occupational tax that was recently rejected by the Alabama Supreme Court.
The state Legislature reinstated the tax in a special session but legal problems have placed collections from earlier this year in limbo, making it difficult for the county to pay its bills and payroll.
It is not clear if any of the bridge loan will go toward a more than $100 million accelerated variable-rate general obligation bond payment due Sept. 15. However, payments on the bonds have been subject to forbearance agreements in the past.
The general-fund problems have taken center stage much of this year while the county still has not restructured $3.2 billion of variable- and auction-rate sewer debt, on which also is owed $755.3 million in swap termination fees. The sewer debt is nonrecourse, so bondholders cannot force the county to increase any other revenue besides sewer rates and related fees.
However, the trustee, Bank of New York Mellon, in early August filed a civil suit in Alabama state court seeking a receiver for the sewer system and a court order requiring county commissioners to raise sewer rates and impose additional charges and fees to pay bondholders.
“The GO debt — that $100 million payment — is a real problem,” said Jeffrey Cohen, a partner at Patton Boggs LLP who specializes in municipal bankruptcies and workouts and is an adviser to a fund holding some of Jefferson County’s debt not related to the GO or sewer bonds.
Cohen said GO debt holders could seek a judgment to force the county to pay that debt in a process he described as “very unpleasant.”
“I really don’t understand what [the county commissioners] are doing,” he said.
