BRADENTON, Fla. — Jefferson County, Ala., commissioners yesterday approved extending forbearance agreements with creditors on the county’s general obligation debt and agreed that next week they would consider measures recommended by special masters reviewing the county’s financially ailing sewer system.
On a 4-to-0 vote, with one member abstaining, commissioners extended forbearance agreements with JPMorgan Chase and Bayerische Landesbank Gironzentrale, which now hold the bulk of $120 million of variable-rate GO warrants, debt not related to the sewer system. It was unknown yesterday whether the extension of the forbearance agreement would cost the county any money.
The bank warrants were to be repaid on an accelerated schedule after they were unable to be remarketed, but the commission has entered a number of forbearance agreements with the banks delaying most of the repayment. The latest forbearance delays some payments until June 20, but documents containing the details of the agreement were not immediately available.
Commissioners yesterday also agreed to consider a resolution Tuesday during their regular meeting addressing some of the measures outlined in a report on the sewer system by two federal court-appointed special masters in February. The special masters prepared the report for a receivership hearing now scheduled for March 24.
The county’s two largest sewer bond insurers, Syncora Guarantee Inc. and Financial Guaranty Insurance Co., and trustee for the warrants, the Bank of New York Mellon, want a federal judge to appoint a receiver to take control of the sewer system largely. They believe the county has failed to adequately raise rates, or implement other revenue raising measures, to pay debt service on nearly $3.2 billion of outstanding sewer debt.
The county has been trying for more than a year to restructure the debt, which is in auction- and variable-rate mode, and also has entered into forbearance agreements with creditors related to the sewer obligations.
After investigating the system’s operations and finances, the special masters recommended that sewer rates be increased 25% and that other revenue enhancements should be considered.
The resolution to be considered Tuesday does not include a sewer rate increase but does include some revenue raising measures that “are consistent with the county’s obligations to its citizens, system ratepayers, the environment, and creditors, and are in the best interests of all concerned parties.”
If commissioners approve the resolution, they plan to hold a public hearing March 31 to consider imposing a $12 fee for processing applications for private meters.
The resolution would authorize hiring a consultant to advise the commission on appropriate amounts for a fixed monthly fee to replace the current monthly minimum charge, impact fees, an industrial surcharge, and certain credits for sewer system users.
The County Commission’s resolution would also implement some operational recommendations as well as to plan for capitalizing labor expenses, installing automatic meter reading systems, and develop a billing system.
The county would also seek permission from “all parties whose consent may be required under applicable bond documents for the county to use system revenues to assist low-income sewer customers with payment of their sewer service charges.”