BRADENTON, Fla. - Jefferson County, Ala., commissioners today hold a special meeting to consider forbearance agreement extensions on nearly $120 million of non-sewer general obligation warrants.
Commissioners will be asked to approve forbearance agreements until March 12 and to approve a budget amendment to permit a partial principal payment of $5 million to creditors, commission president Bettye Fine Collins said in an announcement.
The Series 2001B variable-rate demand obligations warrants, outstanding in the amount of $118.7 million, became bank warrants last March when they were purchased by JPMorgan Chase and Bayerische Landesbank Gironzentrale.
In accordance with standby purchase agreements, the county was obligated to redeem the bank warrants in six semiannual principal installments. The first principal installment of $9.89 million to each bank was due Sept. 15. The county made a $10 million payment toward those debts in return for a forbearance agreement on the balance that expires Thursday.
The variable-rate GO warrants, not related to the county's troubled sewer debt, were downgraded in September to B3 by Moody's Investors Service and D by Standard & Poor's.
Jefferson County's credit ratings plummeted below investment grade last year because of bond insurer downgrades and the county's inability to restructure some $3.2 billion of outstanding sewer debt, most of which is in variable- and auction-rate mode.
Alabama Gov. Bob Riley late last year stepped in to facilitate sewer debt restructuring talks, which are continuing. Forbearance agreements on the sewer debt are due to expire Feb. 20.
In addition to the financial crisis created by the outstanding debt, Jefferson County suffered another blow on Monday when a circuit judge ruled that the county's occupational tax is illegal.
The judge's ruling striking down the tax was prospective, which means the county faces the prospect of returning any taxes collected after Monday.
The county, which depends on collecting more than $70 million a year from the tax for its budget, is expected to appeal the ruling.