BRADENTON, Fla. — The federal judge assigned to Jefferson County, Ala.’s bankruptcy case Tuesday gave attorneys additional time to file briefs concerning how much control the receiver of the county’s sewer system is entitled to retain.
Judge Thomas Bennett said he would accept briefs next week. There are many complex elements to consider, including the county’s defaulted sewer bonds and who should control the revenues, he said.
Bennett’s decision to allow more time came following a two-day hearing in Birmingham, the county seat and Alabama’s largest city.
As the bankruptcy proceeds, two players cannot be in charge of the sewer system’s funds, Jefferson County’s attorney argued.
The receiver, John Young, was appointed last year to take charge of the system and set its rates by an Alabama judge who cited the county’s defaults in his ruling.
Jefferson County filed the largest municipal bankruptcy in the country on Nov. 9, with debts that include the $3.14 billion of sewer warrants and more than $1 billion of general and limited obligation warrants.
Bennett said on Monday that he is not inclined to remove Young, though he may limit the receiver’s powers.
Meanwhile, Birmingham officials said in court documents that they also are opposed to the receiver.
Birmingham has the largest number of ratepayers on the county’s sewer system, and roughly one-quarter of its citizens live at or below the poverty level.
The city said in court papers that those citizens could not afford “substantially higher” sewer rates.
Allowing Young to continue to operate the county’s sewer system “would be tantamount to giving a license to the fox to guard the proverbial henhouse,” said retired federal Judge U.W. Clemon, who is representing the Birmingham City Council.
The city contended that “the present sewer crisis is a direct result of bribery” and recounted the involvement of former County Commission President Larry Langford, who was bribed by his friends, bond dealer William Blount, and Albert LaPierre. Langford selected JPMorgan to handle the refinancing of several sewer warrants and to funnel payments to Blount, the city said.
“Briber JPMorgan, the largest creditor on the debt obligations arising from the bribery, has not only thus far escaped federal criminal prosecution, it is seeking to maximize the proceeds of its unlawful activity by authorizing the receiver to increase by 25% the sewer bills of innocent ratepayers, such as the city of Birmingham and its citizens,” the city said.
The city also claimed the sewer warrants were invalidly issued for several reasons, including that Langford was the only signatory on bond documents even though Alabama law required the signatures of all county commissioners.