Tornadoes Slam Southeast; JeffCo Dips Into Reserves

BRADENTON, Fla. — The devastating string of tornadoes in the Southeast last week killed hundreds of people while wiping homes and businesses off the map.

The large weather system produced more than 150 tornadoes across six states, spreading destruction and concern that the ultimate death toll will surpass the tornado outbreak of April 1974, which killed more than 300. In hardest-hit Alabama, more than 210 deaths were reported by Friday.

A huge twister cut through Tuscaloosa where around 36 people were killed, including several University of Alabama students.

In Jefferson County, where 20 people died, the initial cost of the damage clean-up effort was expected to require the county to dip into reserves to make initial payments for clean-up, a county official said.

The reserves consist of $75 million the county received as part of JPMorgan’s agreement with the Securities and Exchange Commission to settle allegations of fraud and other charges over Jefferson County’s soured sewer debt deals, most of which were sold by JPMorgan. The bank also was counterparty to most of the swaps.

Though JPMorgan did not admit or deny the charges, the bank agreed to pay Jefferson County $50 million, pay $25 million into the SEC fair fund for harmed investors, and to forfeit more than $647 million in swap termination fees the bank claimed the county owed. The SEC later awarded the $25 million from the fair fund to the county.

A Jefferson County official said most or all of its expenditures for clean-up efforts are expected to be reimbursed by the state or Federal Emergency Management Agency.

Multiple deaths also occurred in Arkansas, Georgia, Louisiana, Mississippi, Tennessee, and Virginia.

Insurers predicted their losses would run well over $1 billion.

Two of the region’s biggest upcoming bond sales remained on schedule to sell as planned in the coming weeks.

The Alabama Public School and College Authority is preparing to competitively price $51.3 million of qualified zone academy bonds and $30.6 million of capital improvement pool refunding bonds on May 10.

The deal remained listed on The Bond Buyer’s new-issue competitive calendar as of Friday.

The APSCA bonds are rated Aa1 by Moody’s Investors Service, AA-plus by Fitch Ratings, and AA by Standard & Poor’s.

Bond counsel is Balch & Bingham LLC. The financial adviser is Public FA.

The Fairfax County Economic Development Agency in Virginia remains on schedule to price $206.3 million of transportation district improvement revenue bonds for retail on May 9 and institutional sales on May 10, according to Len Wales, the county’s former debt manager who is now a financing adviser on special projects.

Though Gov. Bob McDonnell’s office reported eight confirmed tornado deaths in the state as of Friday, the deadly twisters struck the state’s southwest, far from Fairfax County. Bond proceeds will provide a portion of the county’s funding for phase one of the Dulles Metrorail Project, which is being managed by the Metropolitan Washington Airports Authority.

The EDC bonds are rated AA by Fitch and Standard & Poor’s, and Aa2 by Moody’s.

They will be sold by Citi, Edward Jones, JPMorgan, Morgan Keegan & Co., Morgan Stanley, and Piper Jaffray & Co.

Public Financial Management Inc. is financial adviser. Sidley Austin LLP is bond counsel. Hunton & Williams LLP is underwriters’ counsel.

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