BRADENTON, Fla. — Jefferson County, Ala., filed for an emergency motion Friday to lift the automatic stay in its bankruptcy case so a trustee can use reserves to pay debt service on the county’s 2006 lease-revenue warrants.
The county said in a court filing that it defaulted on its obligation to provide $6.2 million in revenues for the debt-service payment on the bonds sold by the Jefferson County Public Building Authority.
The reserve fund associated with the warrants contains about $8 million.
The authority sold $86.7 million of special, limited obligation lease warrants secured by payments funneled through facilities that were built with warrant proceeds. The warrants are insured by Ambac Assurance Corp.
Proceeds were used to build several facilities, including a new county courthouse and to renovate, and to expand an existing jail in Bessemer, according to bond documents. The jail sits unused because the county has no funds to open it.
Jefferson County is asking federal Judge Thomas Bennett to hold an expedited hearing on the emergency motion on Monday, the day the debt service payment is due.
Funds for the lease-revenue warrants were due to the trustee First Commercial Bank on Wednesday, the same day that Jefferson County announced that it would no longer make payments on its general obligation warrants.
The GO warrants are atypical in that they are secured by a myriad of revenues in the county’s dwindling general fund. The county’s GOs have a full-faith and credit pledge, though there is no pledge to raise taxes, which is associated with most traditional GOs.
Jefferson County filed for bankruptcy in November after failing to restructure $3.14 billion of defaulted sewer warrants and inaction by the Alabama Legislature, which has failed for several years to provide the county with financial relief.
The county’s general fund has declined significantly because two occupational taxes that provided about a third of general fund revenues annually were struck down by the courts. The taxes were authorized by legislators, who have refused to allow the county to impose a replacement tax.
Concern is rising in the county because the 2012 session of the Republican-led Legislature is about half over, with no sign of lawmakers providing relief this year.
Many lawmakers have adopted the stance that taxes and fees should not be raised, while some legislators disagree with how commissioners are running the county. In Alabama, counties need legislative authority to raise taxes.