BRADENTON, Fla. — After approving a fiscal 2013 budget on Wednesday, Jefferson County, Ala., told holders of its general obligation warrants they won’t get paid.
The bankrupt county said in a disclosure that it plans to default on the GO warrants until they are restructured under a plan of adjustment in its Chapter 9 case.
Jefferson County has about $95.5 million of outstanding fixed-rate GOs insured by National Public Finance Guarantee Corp.
Another $105 million of GOs are in variable-rate mode.
The $15 million that would have been paid on the GO warrants in the coming year is expected to help the county pay its bankruptcy attorneys, according to published reports.
The county also disclosed to investors Wednesday that it did not make the required payment to the Jefferson Public Building Authority for the 2006 lease revenue warrants that were sold to build a county courthouse, jail, and a 911 emergency call system.
Reserves will be used to make the interest payment, the county said. It is not clear if any principal payment is due. The lease warrants are insured by Ambac Assurance Corp.
The county had planned to reject the lease through the bankruptcy process. In recent weeks, attorneys said in court filings that the county was negotiating with Ambac.
Commissioners this week passed a resolution agreeing to a term sheet that would reduce annual lease payments and extend maturities. The term sheet provides a 90-day period to negotiate final terms of the agreement with Ambac.
Alabama’s largest county filed the county’s biggest municipal bankruptcy last November with $4.2 billion of debt mostly related to its overleveraged sewer system.
The Chapter 9 filing came after talks to restructure $3.14 billion of sewer debt collapsed and the state Legislature refused to authorize additional general fund revenues to replace an occupational tax that was struck down by Alabama courts.
The job tax authorized by lawmakers provided a significant source of discretionary funding for the county budget. Its loss has led to hundreds of lay-offs and millions in budget cuts. The county is also downsizing its hospital for the poor.