BRADENTON, Fla. - Jefferson County, Ala., commissioners yesterday approved 11 forbearance agreements delaying sewer debt and swap payments until Feb. 20.
The agreements allow Alabama's largest county to continue debt restructuring negotiations that now have gone on since mid-February. The agreements also allow the county to forestall filing what would be the largest municipal bankruptcy in U.S. history while trying to restructure $3.2 billion of sewer debt, most of which is in troubled variable- and auction-rate mode.
The commission approved forbearance agreements regarding standby warrant purchase agreements with its sewer debt liquidity providers: Lloyds TSB Bank PLC, Regions Bank, Bank of Nova Scotia, State Street Bank and Trust Co., Bank of America NA, Bank of New York Mellon, JPMorgan Chase Bank, and Societe Generale.
Swap-related forbearance agreements were approved with Bank of America, Bear Stearns Capital Markets Inc., and JPMorgan Chase.
It was not immediately clear if Jefferson County or its bond insurers were required to make a payment toward the latest forbearance agreements.
In a regular meeting today, commissioners will entertain a proposed resolution to stop automatic sewer-rate increases, which have been in effect since an ordinance was passed in 1997.
County attorney Jeff Sewell has advised commissioners that the judge presiding in the federal suit concerning the sewer debacle is concerned about the commission taking any action regarding rates while special masters are evaluating the sewer system.
The suit was filed in September by the bond trustee, Bank of New York Mellon, and the county's primary sewer bond insurers, Financial Guaranty Insurance Co. and Syncora Guarantee Inc. The suit claims the county has failed to increase sewer rates and fees sufficiently to pay debt service.