Alabama Gov. Bob Riley Tuesday signed a bill placing strict requirements on Jefferson County’s issuance of debt and use of swaps. He said the law would “usher in a new era of transparency and accountability for Jefferson County.”
HB 613, which passed the Legislature unanimously, requires county commissioners to disclose individuals paid to assist in the purchase or swap of bonds and mandates that all interest-rate swaps be competitively bid. The new law also requires the commission to provide public notice of transactions and hold a public hearing before borrowing $5 million or more or entering a swap agreement.
“The best way any government can build trust among its residents and taxpayers is to open up the books so everyone can see where the money is going,” Riley said in a release.
The bill also requires Jefferson County to publish the amount of debt being sold, the maturities, the names of underwriters involved and each person paid for services and their expected fees, the source of security, and where the public can obtain the preliminary official statement.
In the case of a swap, the county must publish a notice with the notional amount and purpose, terms of payment by each party, expected termination date, source of payment, and people paid for services.
Bill sponsor Rep. Paul DeMarco, R-Homewood, said the needed transparency is something Jefferson County has “sorely needed,” and added, “Hopefully this will prevent the type of criminal fraud and mismanagement we’ve had in the past.”
The bill in response to the financial crisis involving the county’s troubled $3.2 billion of sewer debt that has led to the convictions of dozens of contractors, county employees, elected officials, a lobbyist and bond dealer. The county’s largest creditor in the sewer debt debacle, JPMorgan, has also been cited and fined by the Securities and Exchange Commission, which continues to pursue several former JPMorgan employees in court.
