BRADENTON, Fla. — Jefferson County, Ala., agreed not to file for bankruptcy in return for a 30-day “standstill” agreement under which the receiver for the county’s sewer system will allow negotiations to resume over defaulted sewer debt and won’t pursue a rate increase — at least for now.

The county contemplated filing for bankruptcy after the court-appointed receiver, John Young, said two weeks ago that he would propose 25% increases in sewer rates annually over several years to pay down some of the $3.14 billion of outstanding sewer warrants.

A week later, Young filed a claim with the county seeking the $75 million in the general fund that came from a 2009 agreement between JPMorgan and the Securities and Exchange Commission that settled securities fraud and other charges involving the county’s troubled variable- and auction-rate sewer warrants and related interest-rate swaps.

The investment bank did not admit or deny the charges.

The county has said it depends on the $75 million as a source of liquidity since it does not have access to the capital markets, and because the Alabama Supreme Court earlier this year struck down an occupational tax that provided significant revenues for the general fund.

Many elected officials are concerned that the proposed rate increases are too high for sewer system customers, most of which are poor, though Young has proposed implementing a program to help low-income ratepayers.

Young postponed a public hearing scheduled Wednesday on the rate increase to enable negotiations over the defaulted sewer debt to resume.

Talks reached an impasse after the county offered a settlement on June 10 that would have required creditors to take a $1 billion to $2 billion haircut.

“We have entered into a standstill period where all action by either side is suspended,” Jefferson County Commissioner Jimmie Stephens said in a statement. “We are entering into another round of negotiation which, I sincerely hope, will yield results.”

Young has said that a negotiated settlement is critical to solving the problem.

“The progress over the last week encourages me to delay the public hearing to see if a solution between all parties can be reached,” he said in a statement posted on

After rate increases were proposed, Gov. Robert Bentley said he would meet with county commissioners and local lawmakers about the county’s financial crisis.

Bentley supports a bankruptcy filing if the County Commission decides to pursue that course, his office has said.

Alabama Attorney General Luther Strange also filed to intervene in the receivership court case on behalf of sewer ratepayers.

Strange and state finance director David Perry met individually with commissioners and county attorneys on Sunday but no public comments were immediately made about the discussions.

The 30-day standstill agreement was announced Monday.

Stephens, chairman of the county’s finance committee, said he appreciated the willingness of state officials “to weigh in on this important issue.”

The state’s involvement has been “helpful in moving the process in the right direction,” Young said without providing details.

In addition to the attorney general’s attempt to intervene in the receivership case, two other similar suits have been filed.

Birmingham City Council President Roderick Royal and other plaintiffs filed to intervene this week, according to the Birmingham News. Four local lawmakers filed a complaint to intervene last week.

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