Q: Is leaving the sewer debt unresolved costing my family money?
A: Much like a credit card going unpaid, the interest would be increasing each month the obligation goes without being met. Inaction will only continue to increase the size of the debt. The debt will not only be a great burden to us and our children, but their children as well. If the debt is left unresolved or even if a bankruptcy could be successfully filed, the likely result will be the further economic decline of the County and surrounding cities. Along with economic decline our property and home values will go down. Surrounding cities that might need to go to the bond market for capital improvements will have to pay higher interest rates and spend more of our tax dollars because of the Countys failure to pay its debt.
Q: Does this affect the county and the states ability to borrow money?
A: A recent request made by the state for public school funding received a AA Negative rating, which means citizens will have to pay higher interest rates for projects almost everywhere in the State. The report references the Jefferson County sewer debt in its explanation.
Q: Will Wall Street work with the County to resolve the crisis?
A: The Countys creditors have negotiated with the County and are probably still willing to talk. More importantly, working the problem out is dependent on the State Legislature because our Constitution gives the County Commission little authority to legally resolve the crisis on its own. At one point the Governor worked out a substantive framework for settling the crisis. Unfortunately, that evaporated because the Legislature failed to act on the legislation that was needed for the County to follow through with a settlement. It should be recognized that since then the creditors have paid out close to $300 million on behalf of the County. Also, as the result of a settlement with the Securities and Exchange Commission, one creditor cancelled over $600 million in swap agreements owed by the County. Negotiations with creditors to refinance the debt must take place, but first the Legislature needs to act to give the County the tools it needs to work with its creditors.
Q: Why shouldnt Jefferson County file bankruptcy?
A: See bankruptcy page
Q: Why is resolving this issue important to me?
A: If Jefferson County goes into bankruptcy it would be the largest municipal bankruptcy in U.S. history, having a direct negative impact on the entire state from Huntsville to Mobile. Every single municipality across Alabama would have much greater difficulty securing badly needed bonds for school construction; road, bridge and infrastructure projects; updated and new hospitals. There will be no new jobs due to the lack of economic development. Even worse we could suffer economic decline and loss of jobs. We need to resolve this crisis to help restore the Countys reputation and protect our property values.
Q: What about all the corruption do we have an obligation to pay all of this money back if there was corruption involved?
A: There is no doubt corruption surrounded this gargantuan sewer rehabilitation program and the controversial bond issue and swap agreements. The corruption getting the most attention involves almost two dozen of our own County officials and employees who have been convicted of crimes associated with the bond issue or sewer construction. The County has filed a lawsuit alleging fraud was committed by one of the creditors. There is substantial evidence that the County itself committed fraud in getting creditors to approve the controversial bond issue in the first place. It may take years for the suit to be over, but the law suit will take care of itself. We cant wait for the outcome, but whatever the outcome there are 6 or 7 other major creditors not to mention individuals who bought County sewer bonds. Are we to leave even the innocent individual bond holders and creditors hanging even if one creditor did something inappropriate? One fact we cannot forget is that the County borrowed $3.2 billion dollars and spent $3.2 billion dollars on the sewer system. By all accounts it is an outstanding system and an asset to the County. Yes, we should vigorously pursue wrongdoing and recover whatever we are due, but we have a moral obligation to repay our debt. Any industry that might consider locating in Jefferson County needs to have confidence that our government will live up to its promises. The County has to restore its integrity.