JeffCo commission passes sewer debt deal 4-1

BIRMINGHAM, AL (WBRC) - After meeting for nearly two hours, the Jefferson County commission voted 4-1 to accept a resolution of agreement with New York creditors in the $3 billion sewer debt crisis.

The agreement calls for an 8 percent increase in sewer rates each year for three years, then an annual increase of 3.25 percent in sewer rates for each of the following years until the debt is paid off. Commissioner George Bowman voted against the resolution, citing the sewer rate increases as the reason.

The deal is a 40-year agreement between Jefferson County and debt creditors including JP Morgan Chase. The resolution the commission passed today is a rough version of the deal and many details still need to be fine-tuned. Commissioners are hopeful that the sewer rate increases or the debt total could be lowered.

The deal is contingent on the Alabama legislature approving a bill that would create a sewer authority to oversee the county's sewer system. If formed, the authority would be called the Governmental Utility Service Corporation (GUSC).

Talks between commissioners and Gov. Bentley are underway and the governor is expected to call a special session of the state legislature to address the sewer crisis and this resolution. The state legislature might also pass a new revenue tax to help the county's shortfall in the general fund.

The county hopes to raise $45-$50 million from a new revenue source to help offset the debt as well. The new revenue source could come from a new tax or another funding increase that would apply to the county. The state legislature would have to approve a new funding source for it to go into effect.

If the state legislature fails to pass a bill creating a sewer authority, the sewer rate increase would not go into effect and bankruptcy would become an option for the county once again.

Shortly after the meeting, Gov. Bentey expressed his support of the decision in the following statement:

"I commend the members of the Jefferson County Commission for their difficult decision to move forward with a negotiated settlement. The vote today was the result of months of hard work and deliberation by the commissioners. It may have been easier for the Commission to file for bankruptcy, but this settlement will result in a much better deal for the ratepayers and citizens of Jefferson County and for the state, with more than a billion dollars in debt reduction for the county.

There is a lot left to do to make the settlement work, but Jefferson County now has a framework in place to solve a longstanding local issue that has a significant statewide impact. I look forward to continuing to work with county commissioners and legislators in preparation for a special session of the Alabama Legislature so that we can pass laws necessary to move forward with the settlement and to address the county's general fund budget issues," Bentley said.

Alabama Attorney General Luther Strange also issued a statement of his support:

"I commend the Jefferson County Commission for its leadership and hard work for the people of the county. The job of the Attorney General's Office is to represent the sewer system ratepayers, and we will diligently review the rate structure contained in the proposed settlement to ensure that rates are just and reasonable," Strange said.

The Birmingham Business Alliance showed their support for the decision with a statement from BBA Chairman James T. McManus:

"The BBA applauds Jefferson County's Commissioners for voting today in favor of settling this divisive and complex financial problem. At the most critical juncture in the long and drawn out negotiations with creditors, the Commissioners took control of the situation and negotiated an extremely favorable settlement for taxpayers and ratepayers. This is just the kind of leadership we need to move the County forward.

The final resolution of the sewer crisis will set the stage for a rebound in the County's economy and will strongly support BBA's efforts to stimulate economic development and job creation. We pledge our full support to the County as we move toward a special session of the Alabama Legislature to put in place the elements necessary to finalize the settlement."

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