BRADENTON, Fla. - Jefferson County, Ala., commissioners yesterday approved a pared-down contract to hire Washington-based Book Hill Partners LLC to lobby for federal financial aid amid controversy about the expense of such an action.
On a 3-to-2 vote, commissioners approved a $237,500, 90-day contract, with renewal and cancellation options, instead of the previously proposed $950,000, one-year contract.
Book Hill will seek to help the county obtain a federal backstop, or guarantee, for restructuring its troubled $3.2 billion of sewer system debt, and assist the county in getting infrastructure funding from the economic stimulus package pending in Congress. The firm will be paid from sewer system revenues.
"The Obama administration has expressed willingness to aid municipalities who are struggling in the wake of the current economic crisis and are in need of financial assistance," said commission president Bettye Fine Collins, a Republican. "We are hiring a highly recommended and extremely reputable firm to represent the county's interests in Washington."
County commissioners did not address how effective Book Hill might be given newly appointed Treasury Secretary Tim Geithner's announcement yesterday establishing new rules limiting the influence of lobbyists in the implementation of the Emergency Economic Stabilization Act.
Book Hill did not respond by press time to a request for comment.
County commissioner Jim Carns, a Republican, called the contract an "irresponsible, disgraceful expenditure of Jefferson County taxpayers' dollars."
Carns said he had no reason to believe that President Obama would give serious consideration to the county's debt crisis.
"If he were to contemplate assistance to local governments, I assure you Jefferson County will not rank atop the requests from 641 cities and 43 states making their cases for federal aid from the same federal monies - and where corruption played no role in their own financial disaster," Carns said.
Two of Alabama's congressmen, whose districts include Jefferson County, Rep. Artur Davis, a Democrat, and Rep. Spencer Bachus, a Republican, told the Birmingham News Tuesday that hiring a lobbyist was a waste of money largely because of President Obama's anti-lobbying policy.
Book Hill's hiring was vetted by the governor's office and those involved in a federal lawsuit filed by the county's bond insurers seeking to have a receiver appointed for the sewer system, Collins said.
"The principals of Brook Hill Partners have strong ties to the Obama administration which may assist in reaching the goals of the county more quickly and efficiently," said Collins.
The latest controversy is yet another outgrowth of a bitterly divided County Commission and local community over the sewer system, and whether to file what would be the largest ever municipal bankruptcy. The county has spent nearly a year negotiating to restructure the sewer debt, most of which is in variable- and auction-rate mode, and terminating related swaps.
But the controversy did result in the release yesterday of the first status report on restructuring negotiations that are now being facilitated by Gov. Bob Riley, a Republican.
The report, prepared by the county attorney, said that Riley had "negotiated concessions from certain of the county's sewer creditors worth nearly $2 billion." There are no specifics about what those concessions cover.
"It is in the best interest of the county to (1.) lock in the concessions negotiated by the governor, (2.) apply those concessions to reduce the amount of the sewer debt, and (3.) restructure the remaining debt into a traditional fixed rate vehicle at the lowest possible interest rate," the report said.
The report also said there is no guarantee that bankruptcy would produce a result better, or even equal, to the concessions now on the table. It said bankruptcy would be lengthy and costly and would require the county to litigate with creditors in an attempt to reduce the debt.
Because of the volatile bond market, the report said the county needed federal assistance to keep the cost of borrowing low and permit the refinanced debt to be paid without large annual sewer rate increases.
The report said the county also needed an additional funding source and is seeking state legislative approval to apply a portion of a local one-cent sales tax to the refinanced sewer debt.
The recent controversy ignited partly because a judge recently struck down Jefferson County's occupational tax. Those revenues go into the general fund.
Commissioners announced last week, at the same time they began considering the federal lobbyist contract, that employee layoffs would be necessary if the county could no longer collect the occupational tax. The lobbyist will not be paid from general fund revenues.
The county is appealing the occupational tax ruling.