BRADENTON, Fla. – The U.S. Supreme Court may review a constitutional challenge of an Alabama law that underpins a $339 million refunding sold by Jefferson County on July 14.

The court has created a docket under case number 17-281 for a writ of certiorari petition filed by attorney Calvin Grigsby on behalf of four county taxpayers.

The justices still must determine if they will hear the petition.

“The U.S. Supreme Court only hears about 5% of writ requests such as this,” Grigsby said.

Calvin Grigsby
Attorney Calvin Grigsby filed a writ of certiorari petition with the U.S. Supreme Court seeking a review of Jefferson County’s sales tax refunding.

The scheduling had been delayed because technical adjustments were needed to the initial petition, Grigsby said. Jefferson County has until Sept. 22 to respond.

County Commission President Jimmie Stephens said a waiver will be filed instead notifying the court that the county will not reply to the petition.

“We consider it frivolous and without merit,” Stephens said.

Alabama Attorney General Steve Marshall has already filed a waiver stating his office does not intend to respond to the petition, even though the case involves state court rulings and actions by Alabama lawmakers.

When petitions such as this are filed, each case is evaluated to determine if the issues are being appropriately handled by the parties involved, attorney general's spokeswoman Joy Patterson said.

“In the vast majority of cases we file only an acceptance and waiver to allow the case to proceed,” she said. “The attorney general’s office retains the ability to file in the case at a later time if necessary.”

Jefferson County received more than $1.7 billion of orders for the 25-year refunding deal, which closed on July 31.

The warrants, which are backed by a local 1-cent sales tax, sold with an all-in, true-interest cost of 3.38%.

The refunding brought the county back to the bond market for the first time since emerging from bankruptcy in December 2013. The deal and the new sales tax was authorized in a bill passed by Alabama lawmakers.

The group of local residents wants the U.S. Supreme Court to review court rulings that validated the refunding bonds after Alabama voters in a statewide referendum approved the voting procedures lawmakers used to pass the refunding bill.

If the sales tax is struck down, Jefferson County has covenanted in the indenture to enact a replacement tax and ensure that debt service is paid.

The Supreme Court petitioners are Jefferson County state Reps. Mary Moore and John Rogers, Birmingham Water Works Board member William Muhammad, and Andrew Bennett, a former assistant county tax assessor.

Many of them are ratepayers on the county’s sewer system, and are also challenging the plan that the county filed to exit bankruptcy. The county is appealing a ruling in that case.

The 11th Circuit Court of Appeals heard oral arguments Dec. 16, and has yet to hand down a decision.

Jefferson County has argued in the appeal that the ratepayers’ challenge of the bankruptcy plan should have been considered moot when the county consummated the plan with the sale of $1.8 billion of new, 40-year sewer warrants in 2013.

The county sold the warrants to write down $3.2 billion of old sewer debt, resulting in a 40% haircut to bondholders.

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