Birmingham is pressuring Jefferson County to pay more than $11 million the county owes the city in back taxes and other collections.
In a letter to the county, Mayor William Bell said the city wants to be paid, according to the Birmingham News.
Bell is a former county commissioner who was well-briefed on the county’s financial problems.
Birmingham is Alabama’s largest city, and the Jefferson County seat.
It is not clear if Birmingham officials could be using the unpaid bills to pressure the county into filing for Chapter 9 bankruptcy.
On Nov. 1, the City Council urged the county to file for bankruptcy immediately to stop proposed sewer rate increases. Those increases are designed to support restructuring of the county’s $3.14 billion of defaulted sewer warrants.
The council also set aside $10,000 to hire a retired federal judge to explore legal options to prevent what the council called “unjust” sewer rate increases.
In a resolution, the council said proceeding with a Chapter 9 filing could help the county seek relief, including the “invalidation of the sewer warrants procured by JPMorgan’s bribery, and the recovery by the ratepayers of the Jefferson County sewer system of the financial costs and losses caused by JPMorgan’s bribery and other wrongful conduct.”
In addition, the council said it would petition the U.S. Justice Department to initiate criminal proceedings against the bank “for its criminal conduct” and to seek reimbursement from the firm of all expenses paid by the sewer system ratepayers.
JPMorgan is Jefferson County’s largest creditor. It already settled securities and related charges with the Securities and Exchange Commission with regard to the county’s debt sales, though the firm did not admit or deny guilt.
In the SEC settlement, JPMorgan paid Jefferson County $75 million and forfeited $647 million of claimed swap termination fees.
In a sewer-debt restructuring agreement that the county is trying to reach with creditors, JPMorgan is taking about $750 million of the $1.09 billion in concessions offered by creditors.
Sewer customers, many of which live in Birmingham, have not seen rates increase for several years.
Annual increases of 8.2% over the next three years, and smaller hikes thereafter, have been proposed in a deal to restructure the sewer warrants.
