Judge Approves Jefferson County’s Plan to Exit Bankruptcy

 ========= Old Image Removed =========Array
(
    [_wp_attached_file] => Array
        (
            [0] => 2013/11/sewerpic.jpg
        )

    [_wp_attachment_metadata] => Array
        (
            [0] => a:5:{s:5:"width";i:480;s:6:"height";i:375;s:4:"file";s:20:"2013/11/sewerpic.jpg";s:5:"sizes";a:6:{s:6:"medium";a:4:{s:4:"file";s:20:"sewerpic-336x263.jpg";s:5:"width";i:336;s:6:"height";i:263;s:9:"mime-type";s:10:"image/jpeg";}s:9:"thumbnail";a:4:{s:4:"file";s:20:"sewerpic-140x140.jpg";s:5:"width";i:140;s:6:"height";i:140;s:9:"mime-type";s:10:"image/jpeg";}s:9:"wbhm-icon";a:4:{s:4:"file";s:18:"sewerpic-80x80.jpg";s:5:"width";i:80;s:6:"height";i:80;s:9:"mime-type";s:10:"image/jpeg";}s:18:"wbhm-featured-home";a:4:{s:4:"file";s:20:"sewerpic-398x311.jpg";s:5:"width";i:398;s:6:"height";i:311;s:9:"mime-type";s:10:"image/jpeg";}s:22:"wbhm-featured-carousel";a:4:{s:4:"file";s:20:"sewerpic-339x265.jpg";s:5:"width";i:339;s:6:"height";i:265;s:9:"mime-type";s:10:"image/jpeg";}s:14:"post-thumbnail";a:4:{s:4:"file";s:20:"sewerpic-125x125.jpg";s:5:"width";i:125;s:6:"height";i:125;s:9:"mime-type";s:10:"image/jpeg";}}s:10:"image_meta";a:12:{s:8:"aperture";s:1:"0";s:6:"credit";s:0:"";s:6:"camera";s:0:"";s:7:"caption";s:0:"";s:17:"created_timestamp";s:1:"0";s:9:"copyright";s:0:"";s:12:"focal_length";s:1:"0";s:3:"iso";s:1:"0";s:13:"shutter_speed";s:1:"0";s:5:"title";s:0:"";s:11:"orientation";s:1:"0";s:8:"keywords";a:0:{}}}
        )

    [_imagify_data] => Array
        (
            [0] => a:2:{s:5:"stats";a:3:{s:13:"original_size";i:0;s:14:"optimized_size";i:0;s:7:"percent";i:0;}s:5:"sizes";a:1:{s:4:"full";a:2:{s:7:"success";b:0;s:5:"error";s:77:"WELL DONE. This image is already compressed, no further compression required.";}}}
        )

    [_imagify_status] => Array
        (
            [0] => already_optimized
        )

    [_imagify_optimization_level] => Array
        (
            [0] => 1
        )

)
1636099859 
1385078400

Federal bankruptcy judge Thomas Bennett has confirmed Jefferson County’s bankruptcy plan, paving the way for the county to exit its $4.2 billion bankruptcy in December. Most of that debt was linked to corruption, mismanagement and bad deals around the county sewer system.

Thursday’s ruling ends two years under municipal bankruptcy, the second largest in U.S. history after Detroit’s filing earlier this year. County leaders say the confirmation allows Jefferson County move past its fiscal turmoil.

The plan calls for creditors to give up about $1.5 billion in concessions. Meanwhile, sewer customers will see their rates rise for 40 years. Businesses already took a 3.49 percent increase on November 1. Then for the next four years business and residential customer rates go up 7.89 percent. Sewer rates rise by 3.49 percent a year after that.

Jefferson County Commission President David Carrington is pleased the court approved the plan. He says the plan’s viability is shown through the fact the county was able to find investors to buy almost $1.8 billion in refinanced debt.

“They didn’t do it on a lark,” said Carrington. “They studied it. They understood it. They asked difficult questions.”

Jefferson County spent almost 26 million dollars in fees to lawyers and other groups through the process, but Carrington says it was worth it. After the county officially exits bankruptcy December 3rd, it can focus on economic development.

“What the county needs is more jobs, more business. That will stimulate a growth in population and it’ll stimulate housing developments and so we’re excited to move into the next phase of this commission,” Carrington said.

The judge turned back challenges from two groups of sewer customers, but they could appeal.

Critics say the plan could set things up for more problems down the line and point out the county’s debt payments rise dramatically after 10 years. Leaving the potential for more rate increases or a return trip to the bankruptcy court.

Andreas Rauterkus, finance professor at UAB, wasn’t surprised the judge approved the plan. But he says that jump in payments is concerning.

“For the county to be able to pay off or make the debt payments 10, 15, 20, 30, 40 years from now…there’s a lot of uncertainty there,” said Rauterkus.

He says it’s unlikely the county will be able to refinance under more favorable terms in 10 years, even with a better credit rating, because interest rates will probably be higher. Rauterkus also says the county may have difficulty attracting new sewer customers through economic development because of higher bills. He points to the future Interstate 22 which could be completed next year.

“A lot businesses in particular are gonna say I can just build in Walker County. I have the exact same connection to the interstate system but I can do it at a much lower cost,” said Rauterkus.

While much of the plan exists in the complex the world of municipal finance, those rate increases are what the general public will see. Dan Jones, owner of University Laundromat in Birmingham, is not happy about that.

Jones estimates says the rate increases that have already gone into effect for business will cost him an extra $600 a year. That eats into already thin profit margins or forces him to raise prices.

“That’s the last thing I want to do,” said Jones.

Jones doesn’t believe residents should have to pay higher rates given that corruption was a contributor to the massive bankruptcy.

“I deal in quarters down here. So you get talking it takes a lot quarters to make a billion dollars, but they’re trying to get it back a quarter at time from us and that’s not right,” Jones said.

The slogan for Jones’ laundromat is “wash, rise, repeat.” Jefferson County has been through the financial wash and rinsed off through bankruptcy. The question now is if in ten years it will repeat.

~ Andrew Yeager, November 22, 2013

 

Puerto Rico holds general election that promises to be historic

Puerto Rico is holding elections that will be historic regardless of which of the top two gubernatorial candidates wins.

Boeing machinists approve contract, bringing an end to a bruising seven-week strike

Striking machinists voted to approve an agreement that will hike wages by 38%. The deal was endorsed by union leaders, who warned that Boeing’s next offer might be worse.

States and cities beef up security to prepare for potential election-related violence

Washington state's governor activated the National Guard to stand by to help local law enforcement as needed. Meanwhile, extra security is in place at locations across Washington, D.C.

When will mail-in and absentee ballots be counted?

Various state rules regarding when election officials can process and count mail ballots means it will likely take some time after Election Day before the results from these ballots are fully known.

When do polls close in every state? Here’s a timeline

The Associated Press can't call any races until polls close in their respective state. Here's a breakdown of when that will happen.

How has the Electoral College survived, despite being perennially unpopular?

Despite its substantial-sounding name, the Electoral College isn’t a permanent body: It’s more of a process. For decades, a majority of Americans have wanted it to be changed.

More Government Coverage