BRADENTON, Fla. - No progress has been made at the local or state level toward resolving Jefferson County, Ala.'s $3.2 billion sewer debt crisis and a federal court should appoint a receiver for the sewer system, the county's bond insurers and trustee said in court documents.
Syncora and FGIC said they faced paying a nearly $30 million debt payment due today. That is an accelerated principal payment on outstanding variable-rate debt, now held by banks.
Meanwhile, Jefferson County commissioners yesterday approved yet another set of forbearance agreements delaying default interest rate payments on variable- and auction-rate sewer debt until April 20. The county is not contributing anything to extending the forbearance agreements.
"The county has sat idle for far too long while the insurers are being forced to make these huge debt service payments on the county's behalf," Syncora and FGIC said in a 23-page joint motion urging that next week's hearing go forward. "The insurers cannot afford to wait any longer."
The insurers sited numerous instances since the sewer debt crisis surfaced a year ago where the county has failed to raise sewer revenues. They said no leadership at the county or state level appeared to be working toward a viable solution of the sewer crisis.
Syncora and FGIC also said their regulator, the New York State Insurance Department, supported their request for the appointment of a receiver.
In the county's motion for a delay filed Tuesday, attorneys said there is "no emergency, nor any risk of immediate and irreparable harm" that required the court to act next week.
Those assertions are "absurd and untenable," the Bank of New York Mellon said in its motion objecting to a delay.
Since the insurers and trustee filed a federal suit Sept. 16 seeking a receiver, the financial condition of the Jefferson County sewer system has "declined precipitously" and the county has failed to make more than $87 million of principal payments, the Bank of New York Mellon said.
Both the insurers and the trustee said a number of reports, including a court-appointed special masters' investigation, have detailed inefficiencies in the sewer system's operations but the county has failed to take corrective action or raise rates.
The insurers said they have paid nearly $220 million on Jefferson County's debt policies since the sewer debt crisis became known a year ago.
The receivership hearing is scheduled for Wednesday in federal court in Birmingham, the seat of Jefferson County.
