BRADENTON, Fla. — Commissioners in Jefferson County, Ala., will again meet in a special closed-door session this week in Birmingham to discuss a wide range of issues, including the possibility of filing for municipal bankruptcy.

Commissioners, meeting Thursday, will also talk about whether to extend a standstill agreement with the sewer system’s receiver or approve a settlement offer that has been put before creditors holding the county’s sewer warrants, according to an announcement from board president David Carrington on Saturday.

The California law firm Klee, Tuchin, Bogdanoff & Stern LLP was hired by the commission in an executive session last week as a consultant. On Thursday, commissioners will talk about hiring the firm as legal counsel.

Many of the attorneys at the firm worked on Orange County, Calif.’s bankruptcy.

Several commissioners previously said that a solution to the county’s financial woes must include a resolution of its sewer debt crisis as well as a way to address the loss of a major source of revenue supporting the general fund: an occupational license tax that was struck down by a court earlier this year.

Alabama lawmakers have yet to step forward with a plan to solve that problem.

Jefferson County recently forwarded a settlement offer to creditors holding the $3.14 billion of troubled sewer warrants.

The offer reportedly seeks a $1.3 billion haircut for creditors and single-digit sewer system rate increases over several years.

The county has defaulted on the non-recourse sewer warrants as well as $125 million of general obligation warrants that are unrelated to the sewer debt.

Gov. Robert Bentley and members of his finance staff also have been involved in the crisis.

“We’re working right now with both sides, the creditors as well as the county, to try to help them come up with a resolution so they do not have to go through bankruptcy,” Bentley told Channel 13, the local NBC affiliate, this past weekend.

Last month the court-appointed receiver for the sewer system announced that he would seek multiple years of double-digit rate hikes and other adjustments aimed at paying off the massive sewer debt.

After the receiver announced his plan to seek rate increases, the county threatened to file for bankruptcy. The two parties later agreed to a 30-day standstill, which ends Friday. The standstill was to allow negotiations with creditors to continue.

A number of local officials and Alabama Attorney General Luther Strange filed motions with the court seeking to intervene in the receivership case on behalf of ratepayers.

On Monday, the judge overseeing the case ruled that the attorney general could intervene on behalf of ratepayers but others could not.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.