BRADENTON, Fla. — A financial advisory and restructuring firm representing investors in bankrupt Jefferson County, Ala.'s sewer warrants is suggesting how to restructure the debt and add new revenue to support the county's overleveraged sewer system.

GLC Advisors & Co. represents multiple sewer warrant holders who own more than $700 million of the defaulted debt, or 20% of the outstanding warrants, the firm said in a presentation to the county.

The restructuring firm did not detail what kind of debt the investors are holding. Jefferson County has about $3.14 billion of outstanding sewer warrants, nearly all of which is in variable- and auction-rate mode.

GLC managing general partner J. Soren Reynertson in New York was in meetings and unavailable to comment Thursday, according to a spokeswoman in his office.

"We believe that Jefferson County is obligated to set sewer fees by the existing formula established in the sewer warrant indenture," GLC said in its submittal for a public hearing Monday, which the county posted later in the week at

GLC reviewed similar sewer systems like Jefferson County's that are under federal consent decrees, and the rates each pay.

"Jefferson County's sewer system has fewer customers, relative to its size, to support the cost of the system," GLC said, noting that other systems — including several in Alabama — raise additional revenue through mandatory hook-up for new development. Jefferson County does not.

The presentation said that sewer rate increases, such as those proposed in a settlement the county negotiated with creditors last year, are similar to the average projected increases of comparable sewer systems operating consent decrees. The county later rejected the settlement and filed for bankruptcy.

GLC also said that Jefferson County residents pay some of the lowest combined property taxes and sewer rates compared to peer systems, though investors support creating a low-income assistance program for customers unable to pay their bills, the firm said.

The presentation also mentioned the settlement offer that was on the table last fall that was rejected by the county, and said that because interest rates are at historic lows, a refinancing of the sewer warrants now "will help keep sewer fee increases to a minimum."

The county has not raised sewer rates since early 2008. Shortly afterward, the credit market crisis evolved sending interest on the variable-rate warrants to penalty levels as well as freezing the auction-rate warrants. In late 2008, then-members of the County Commission voted to suspend automatic rate increases that supported the warrants.

Last September, the current commission negotiated the framework of a settlement in which creditors agreed to take a haircut of $1 billion in return for refinancing $2.05 billion of sewer warrants into 40-year debt. The proposed pact required the Legislature to create a special district to take over the sewer system and provide a nonbinding moral obligation for repayment of about $1 billion.

The settlement also required annual sewer rate increases of 8.2% over each of the first three years. The proposed increases resulted in an outcry from residents as well as the Birmingham City Council, which urged the county to file for bankruptcy and threatened to file suit to stop the rate increases.

County commissioners abruptly broke off settlement talks on Nov. 9 and filed the largest municipal bankruptcy in the country.

The county just completed hearings to take public and professional comments on sewer rates. Officials have said they expect to propose a rate increase next month, though a much lower increase than what was discussed in settlement negotiations last year.

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