Jefferson County Commission Extends Forebearance Pacts on Sewer Debt, GOs

BRADENTON, Fla. - Jefferson County, Ala., commissioners yesterday approved forbearance agreement extensions on the county's troubled sewer debt as well as on $120 million of non-sewer general obligation debt.

Under terms presented by creditors, commissioners were required to approve the sewer forbearance agreements and the GO forbearance simultaneously.

Commissioners voted 3 to 0 to approve both agreements, while commissioners Jim Carns and Bobby Humphryes abstained. The two men have said they believe the county should file for bankruptcy to solve the financial crisis surrounding the sewer system.

The forbearance with creditors on Jefferson's $3.2 billion of sewer debt - most of which is in troubled auction- and variable-rate mode - runs through Dec. 8. A plan to restructure the sewer debt is being discussed with creditors agreeing to $1 billion in concessions. However, the county has been unable to find approximately $30 million in addition to sewer system revenues in order for the plan to work.

The county has $120 million of variable-rate GO warrants not related to the sewer system that are now being held by liquidity providers and subject to an accelerated amortization schedule. Commissioners agreed to make a $10 million payment on the GO debt to obtain the forbearance until Jan. 15. No additional payment was made toward the sewer forbearance.

In recent weeks, commissioners have discussed heightened concern about the GO warrants because they are backed by the county's full faith and credit, unlike the sewer revenue warrants.

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