BRADENTON, Fla. — The small city of Brighton, Ala., has defaulted on general obligation warrants it issued in 2003.
In addition, city officials have failed for more than a decade to file financial documents required by its continuing disclosure agreement, according to DPC Data and the Municipal Securities Rulemaking Board’s EMMA system.
Of the original $1.12 million of nonrated, noninsured GO warrants that were sold, $885,000 are outstanding.
Brighton was unable to make last week’s scheduled interest payment of $22,783 or an additional sinking fund deposit in order to comply with a $35,000 mandatory redemption on Aug. 1, according to a notice filed by acting city clerk Hazel Williams.
The default was caused by a “lack of funds,” the notice said.
City officials could not be reached at press time.
Brighton Mayor Angelo Hinkle told the Birmingham News Wednesday that despite the default, the city plans to make bond payments.
Hinkle also said the city does not have a reserve fund.
Brighton is in Jefferson County, about 12 miles southwest of Birmingham. The 2010 U.S. Census said the city had a population of 2,945.
The city’s finances have been in disarray for some time, according to published reports.
In addition, the city has suffered indirectly from Jefferson County’s layoff of 500 workers, a source familiar with the area said.
Many Brighton residents worked for the county and were laid off when 500 employees were placed on administrative leave several months ago after Alabama courts struck down a county occupational tax. The job tax provided a significant source of revenue for the county’s general fund and has not been replaced, creating a financial crisis for the county.
Because of the layoffs, many Brighton residents have been unable to pay bills due to the city, and that has contributed to Brighton’s financial problems, the source said.
The defaulted $1.12 million of GO warrants are secured by an irrevocable pledge of the city’s full faith, credit, and taxing power, as well as proceeds of privilege license and excise taxes levied by the city, according to bond documents.
Four maturities of warrants are outstanding: $70,000 of warrants priced to yield 4.35% maturing in 2013, $210,000 priced to yield 4.8% that mature in 2018, $270,000 priced to yield 5% due in 2023, and $335,000 priced to yield 5.2% maturing in 2028, according to Thomson Municipal Market Monitor. There have been no recent trades, according to Thomson Reuters.
Jefferson County on Friday is scheduled to announce if it will file for bankruptcy or settle with creditors on a plan to restructure $3.14 billion of troubled variable- and auction-rate sewer warrants.
If a settlement is reached, Gov. Robert Bentley has agreed to call a special session of the Legislature to deal with state approvals required by the sewer settlement. Bentley also said he would work toward solving an impasse that occurred earlier this year when lawmakers refused to pass several bills that would have provided the county financial relief because of the job tax loss.